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Climate and the inequality of nations

Countries grow richer as one moves away from the equator, and the same is generally true if one looks at differences among regions within countries. However, this was not always the case: research has shown that in 1500 C.E., for example, there was no such positive link between latitude and prosperity. Can these irregularities be explained?

It seems likely an answer can be found in factors strongly associated with latitude. Perhaps the strongest correlate of latitude is the extent of ultraviolet radiation (UV-R) that a country, or a region, is exposed to. The figure below illustrates the tightness of that link across countries and continents.

The correlation between UV-R and absolute latitude by country and continent by Carl-Johan Dalgaard, Pablo Selaya, and Thomas Barnebeck Andersen. Used with permission.
The correlation between UV-R and absolute latitude by country and continent by Carl-Johan Dalgaard, Pablo Selaya, and Thomas Barnebeck Andersen. Used with permission.

There is no mystery here, as UV-R is determined by the distance from the sun. But other factors matter too, especially elevation above sea level, and the extent of cloud cover.

Findings that UV-R turns out to impact cross-country differences in current economic prosperity, even when the influence from a range of factors that may influence the growth process are filtered out, or that may be correlated with UV-R – e.g., latitude, elevation, temperature, precipitation, and agricultural productivity, to name some. We find an impact from UV-R also within countries where economic activity is measured at various arbitrary levels of aggregation. For example, in  exploring the differences among “virtual regions” of four degrees latitude by four degrees longitude, in this type of setting, we can additionally filter out the influence from country-specific characteristics and regional differences in cultural traits. Overall, this means that the impact of UV-R that is identified is unlikely to be convoluting the influence from factors like institutions, which hold a fundamental effect on economic development.

At this stage, one may have the sinking feeling that one mystery has been replaced by another: why would UV-R matter to economic development? We can rule out an impact via the risk of skin cancer and thus mortality, based on research in epidemiology and econometric tests. Explanations related to spurious correlations with, for example, (agro-) climatic conditions cannot account for the UV-R regularity either, since we always control for them. Instead, we propose a mechanism that relies on two main elements.

The first is that UV-R affects morbidity, according to an extensive epidemiological literature. Concretely, UV-R is a root cause of a cluster of debilitating eye diseases. Based on the premise that visual acuity is particularly important in skilled occupations, we propose that UV-R may have reduced the incentive to accumulate skills historically. The logic is simple: the less time one has to recuperate investments in accumulating skills, the lesser the incentive to spend one’s early life doing that. In fact, we are able to document that eye disease created a marked “gap” in work life expectancy between high and low UV-R regions, historically.

The second element derives from research showing that systematic differences in work life expectancy can have a strong influence on when the modern process of economic growth commences. “Latecomers” to this process are the poor countries of the world today. Indeed, a recent study shows that a country, where the work life expectancy of a skilled worker is five years shorter than another, will have its take-off to a path of sustained economic growth delayed by more than a century.

Accordingly, we propose that eye disease ecology in high UV-R regions reduced the incentive to invest in human capital in the past, and thus delayed the timing of the onset of modern growth. As a result, a UV-R gradient in prosperity was created.

We submit this mechanism to a demanding battery of tests, evaluating its plausibility both qualitatively and quantitatively. For example, we demonstrate that the UV-R gradient only emerges after the onset of modern growth, where the role of human capital presumably becomes first order. Hence, we would expect to see a strong negative link between UV-R and economic prosperity today. But, historically, where human capital was relatively less important, the same regularity would not be visible. This provides an account for the latitude regularities mentioned above.

We believe the proposed mechanism is a plausible reason why UV-R seems to predict contemporary income differences in a global perspective, indirectly explaining some of the observed correlations between latitude and current economic prosperity. It can also account for the historically changing nature of the link between latitude and prosperity. We obviously can’t rule out that other mechanisms might also be at work at the same time. Exploring the impact of UV-R on economic development is an interesting topic for future research, potentially shedding more light on the link between climate and the inequality of nations.

Headline image credit: clouds sky blue weather by PublicDomainPictures. Public domain via Pixabay.

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