Sunday, March 6, 2016

Move Over Industrial: On the Economics of the NEOLITHIC Revolution

I had intended to post this last year but it got knocked out of the queue by a Nobel Laureate talking about coffee and kidneys.
From A Fine Theorem, July 1, 2015:
The Industrial and Neolithic Revolutions are surely the two fundamental transitions in the economic history of mankind. The Neolithic involved permanent settlement of previously nomadic, or at best partially foraging, small bands. At least seven independent times, bands somewhere in the world adopted settled agriculture. The new settlements tended to see an increase in inequality, the beginning of privately held property, a number of new customs and social structures, and, most importantly, an absolute decrease in welfare as measured in terms of average height and an absolute increase in the length and toil of working life. Of course, in the long run, settlement led to cities which led to the great inventions that eventually pushed mankind past the Malthusian bounds into our wealthy present, but surely no nomad of ten thousand years ago could have projected that outcome.
Now this must sound strange to any economist, as we can’t help but think in terms of rational choice.

Why would any band choose to settle when, as far as we can tell, settling made them worse off? There are only three types of answers compatible with rational choice: either the environment changed such that the nomads who adopted settlement would have been even worse off had they remained nomadic, settlement was a Pareto-dominated equilibrium, or our assumption that the nomads were maximizing something correlated with height is wrong. All might be possible: early 20th century scholars ascribed the initial move to settlement to humans being forced onto oases in the drying post-Ice Age Middle East, evolutionary game theorists are well aware that fitness competitions can generate inefficient Prisoner’s Dilemmas, and humans surely care about reproductive success more than they care about food intake per se.

So how can we separate these potential explanations, or provide greater clarity as to the underlying Neolithic transition mechanism? Two relatively new papers, Andrea Matranga’s “Climate-Driven Technical Change“, and Kim Sterelny’s Optimizing Engines: Rational Choice in the Neolithic”, discuss intriguing theories about what may have happened in the Neolithic.

Matranga writes a simple Malthusian model. The benefit of being nomadic is that you can move to places with better food supply. The benefit of being sedentary is that you use storage technology to insure yourself against lean times, even if that insurance comes at the cost of lower food intake overall. Nomadism, then, is better than settling when there are lots of nearby areas with uncorrelated food availability shocks (since otherwise why bother to move?) or when the potential shocks you might face across the whole area you travel are not that severe (in which case why bother to store food?). If fertility depends on constant access to food, then for Malthusian reasons the settled populations who store food will grow until everyone is just at subsistence, whereas the nomadic populations will eat a surplus during times when food is abundant.

It turns out that global “seasonality” – or the difference across the year in terms of temperature and rainfall – was extraordinarily high right around the time agriculture first popped up in the Fertile Crescent. Matranga uses some standard climatic datasets to show that six of the seven independent inventions of agriculture appear to have happened soon after increases in seasonality in their respective regions. This is driven by an increase in seasonality and not just an increase in rainfall or heat: agriculture appears in the cold Andes and in the hot Mideast and in the moderate Chinese heartland. Further, adoption of settlement once your neighbors are farming is most common when you live on relatively flat ground, with little opportunity to change elevation to pursue food sources as seasonality increases. Biological evidence (using something called “Harris lines” on your bones) appears to support to idea that nomads were both better fed yet more subject to seasonal shocks than settled peoples.

What’s nice is that Matranga’s hypothesis is consistent with agriculture appearing many times independently. Any thesis that relies on unique features of the immediate post-Ice Age – such as the decline in megafauna like the Woolly Mammoth due to increasing population, or the oasis theory – will have a tough time explaining the adoption of agriculture in regions like the Andes or China thousands of years after it appeared in the Fertile Crescent. Alain Testart and colleagues in the anthropology literature have made similar claims about the intersection of storage technology and seasonality being important for the gradual shift from nomadism to partial foraging to agriculture, but the Malthusian model and the empirical identification in Matranga will be much more comfortable for an economist reader....MORE