Question

Why might the long era of settled agriculture under Malthusian conditions have changed people culturally and genetically to make modern growth possible?

Answer 1

The Industrial Revolution was preceded by a long Malthusian interval of thousands of years where material living standards and life expectancy did not improve. Living conditions in England in 1800 were the same as those of hunter gatherers before settled agriculture. Yet within the long Malthusian interval one important economic parameter did change dramatically, and that was the risk free real rate of return on capital. In England this fell from about 10% in 1200 to 3- 4% by 1800. I argue that interest rates in England fell between 1200 and 1800 because of a change in the time preference rates of the average person. Those with preferences towards work and accumulation reproduced more successfully within the economic environment of pre-industrial England. This long run effect of institutional stability may help explain the long gap between the emergence of of secure property rights and the eventual Industrial Revolution

People in the hunter-gatherer societies that preceded settled agriculture were evolutionarily adapted to have high rates of time preference, and that the long period of settled and institutionally stable agrarian societies that preceded the Industrial Revolution produced a substantial change in the preferences of individuals.

Parents in such a society have a choice about how many children to produce, and how much capital to endow them with. One strategy would be to use all resources for reproduction, and give the children nothing. Another would be to have fewer children and endow them with more capital to aid in the children’s subsequent efforts at reproduction. Suppose that producing a child costs $100 in resources (including the time of the parents). Is is better for the parents to have the child themselves, or to pass on the $100 to their children and have them produce a child? The first consideration, which suggests that in evolutionary terms it is better for the parents to do the reproducing themselves, is that parents share only half their genes with their children. In terms of survival of genes one child is the equivalent of two grandchildren. Thus if $100 spent oneself to produce a child is equivalent in terms of genes passed on to $200 given to a child. If that was the only consideration it would always be best for parents to maximize their direct offspring.

The Rogers theory of time preference, however, is predicated on the existence of substantial stocks of assets such as land and capital within the economy which are privately owned, and which allow the possibility of transferring resources to offspring for use years later.  But in hunter gatherer society land is not privately owned, and the stock of capital goods extremely small, normally what a person can carry as they move from day to day. Thus Rogers’ calculus cannot come into play. Indeed in a society with little or no privately storable goods the selection pressures will favor those who are impatient and consume as much as they can get immediately. Thus for 99% of human evolutionary history there could have been little or no selective pressure towards the “Rogers bound” of time preference rates. Indeed if the world before the Neolithic Revolution was similar to that of modern forager societies, then people at the time of the Neolithic Revolution should have had high rates of time preference. For typically these societies have strong social norms that require sharing of many food supplies within the social group, norms that also individuals typically try and escape by quickly consuming privately any good that they are required by custom to share. If the Rogers argument for the determination of time preference rates is correct then the selection towards individuals with lower time preference rates had to have occurred within the period of settled agrarian societies.

Even early agriculture may not have been sufficient to produce the conditions for selection for low time preference rates. In shifting cultivation societies land is still a free good, and the patches of farmland created from the forest quickly lose their value through weed infestations and decline of fertility. Only with the arrival of substantial livestock holdings and permanent fields do we get the possibility of selection for lower rates of time preference. Even once the actual capital exists there also have to be systems of property rights which allow its reliable transmission between parents and children. For at least some early agriculturalists seem to have had property rights rules giving all members of the community usufruct rights to land. Or in other settings land distribution was determined period by period

through the application of military force. Thus New Guinea hill tribes such as the Dani, until recently had a densely settled system of agriculture with sweet potato gardens the main food source. Land was a valuable capital resource since almost all the forest land had been brought into cultivation, and the various groups lived in close proximity. But there was incessant conflict between different coalitions of settlements over the land that lay between villages, with access determined by success in battle. Access to land was determined by military conflict, not by any stable property rights system.

In these cases also, it is not possible for parents to pass on many resources to their children. Parents who attempt to do so, rather than maximizing the numbers of offspring they themselves have, would produce a smaller share of the next generation. Thus societies at the dawn of settled agriculture should have exhibited high time preference rates. But suppose that for genetic or cultural reasons people in these early agrarian societies differed in their rates of time preference, and in their life cycle savings behavior. Those who passed on more assets to their children would, by the Rogers argument, be increasing their share of the population if access to resources was an important component of an individuals’ fitness. These characteristics of individuals could also be associated with other traits such as investing more in the education of children, or with preferences for greater amounts of work input.