Wealth, Time Preference, Seed Corn, and the Collyer Brothers

220px-Collyer1a

Individuals vary a lot in wealth,  and so do populations.  Many factors influence wealth – income, the payoff for saving, historical experience, etc – but people likely vary in their innate propensity to save. This may be partly due to differences in time preference, but that assumes that people save for rational reasons, and that may not be the whole story. It could be that people, at least some people, just feel like saving, and would do so even if it were economically irrational.  And other people may not feel that way, and don’t save much even when saving has a big payoff.

It looks as if saving has had a bigger payoff in recent millennia than it typically did in the distant past. I’m not say that as an iron law, more as a tendency.  There may have been ways of saving food for hard times (winter, mainly)  quite a while ago, at least in cold climates… at least you’d think so.  On the other hand, there is almost no sign that Neanderthals had any means of preserving food.

It is at least true that a number of new ways of saving have been developed since the end of the Ice Age.

Farming must have favored low time preference. At minimum, people have to wait a few months for the payoff from their efforts in almost any kind of farming. Some crops, like olives, have high productivity but take several years to mature.

Grain crops can be stored,  and seed must be saved for the next growing season.  In some societies, private property was reasonably secure, so people could save wealth in the form of land or other assets.

In these new situations, where saving had higher payoffs, individuals that had a greater innate propensity to save ought to have had higher fitness.   Having lower time preference, acting more like homo economicus , may have been favored, but surely a simple hoarding tendency, more like a squirrel burying nuts for the winter, would have been favored as well.  Maybe there was selection for being more of a squirrel…

Of course there is a distribution of such traits, ranging from a little to a lot.  In a population with a greater mean amount of tendency-to-save, some would do so to a ridiculous extent.  Hoarders.  They may not be equally common in every population.

If I had to guess, I would say that extreme hoarders ought to be rarer among populations that had a shallow experience of agriculture and/or no winter.   I have long wished that someone would discover a cave once occupied by the Neanderthal version of the Collyer brothers, but this line of thought suggests that alas, that may never be.

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65 Responses to Wealth, Time Preference, Seed Corn, and the Collyer Brothers

  1. feministx says:

    How do you distinguish between hoarding (which is a bit compulsive) and the mere accumulation of stuff due to negligence to get rid of it? Hoarders are attached to their stuff and get neurotic about losing any of it, but some people have a lot of stuff and may not be attached to it in the same way.

    In modern society, certain races are very into bling bling. Whatever their income, they want big cars and designer stuff to show off. If we take Asians and a blacks of the same income level, blacks may have more stuff because they spend their money on stuff while Asians secretly stash their money under the rug. We know who the hoarder is here, but it may not be easy for a study to create a metric that could objectively assess that.

    I assume that non agrarian equatorial peoples develop the tendency to want bling bling for the converse of the reason that cold climate people developed the tendency to hoard and save. If people are not sedentary long enough to store stuff up for years or think about what something will produce for your years later, then they develop the desire to show off everything they have all at once as much as they can.

    But in the modern world, both instincts might get you to the same observed result- you end up with a lot of stuff laying around.

    • Greying Wanderer says:

      “How do you distinguish between hoarding (which is a bit compulsive) and the mere accumulation of stuff due to negligence to get rid of it?”

      Behavior along a spectrum. One notices extreme hoarding behavior because it’s extreme but

      “while Asians secretly stash their money under the rug”

      accept *average* hoarding behavior as “normal.”

      .

      “I assume that non agrarian equatorial peoples develop the tendency to want bling bling for the converse of the reason that cold climate people developed the tendency to hoard and save.”

      In the tropics maximum bling equals maximum reproduction. In colder climates maximum bling equals winter starvation.

  2. d0jistar says:

    “while Asians secretly stash their money under the rug”

    I am too lazy to look it up, but among modern countries, apparently one good predictor of the savings rate is the male:female ratio. When there are a lot of surplus men around, they apparently have to save heavily to get the ladies/golddiggers (Rorschach test: pick one).

    Modern (and presumably historic) poor people also tend to make bad financial decisions with short-time horizon preference in part because they are under constant financial stress, which makes it difficult to exercise discipline. Heavy advertising to promote consumption surely can’t help.

    As for olives, I thought trees took decades to mature and that archaeologists used ancient plantings as an indicator whether people thought they could live the rest of their lives in peace or not. If you’re expecting an invasion in a few years, don’t bother.

    In terms of societal adaptation, I would say one purpose of a modern economy is to somehow convince people to save and invest, since one main reason our lives are nicer than 200 years ago is simply that there is a lot of capital invested per person now compared to then. Like power plants and machines instead of your back and an ox. Getting people to save real capital requires all sorts of complex societal machinery: various investment options to cater to different risk preferences, reliable currency, some hope of spending it in the future (e.g. the luxury of active retirement), reasonable property laws, etc.

    • feministx says:

      “When there are a lot of surplus men around, they apparently have to save heavily to get the ladies/golddiggers (Rorschach test: pick one).”

      I see that men have that obvious incentive to save, but when I think “hoarder”, I think of a female. More of a nesting thing.

    • Greying Wanderer says:

      “As for olives, I thought trees took decades to mature”

      Off-topic but this might lead to groves of wild food-producing trees becoming important forager centers: oak groves (for acorns), figs and dates, apple valleys etc.

  3. JayMan says:

    In a population with a greater mean amount of tendency-to-save, some would do so to a ridiculous extent. Hoarders. They may not be equally common in every population.

    If I had to guess, I would say that extreme hoarders ought to be rarer among populations that had a shallow experience of agriculture and/or no winter.

    That’s been my guess. Anecdotally, most of the hoarders I know hail from some pretty cold climates…

  4. JayMan says:

    BTW, that was one of the first things that came to my mind when I first read The 10,000 Year Explosion… 😉

  5. Real, pathological hoarders can’t tell the difference between good and bad stuff, often form emotional attachments to what others would consider garbage, and believe something bad will happen to them if they get rid of it. It’s said to be some manifestation of obsessive-compulsive disorder. I grew up with hoarding parents, and it got bad in my teenage years– it was never to the extent of TV-Hoarding– but they would save reams upon reams of scrap paper, bags of old clothes– just generally things other people would have the good sense to throw out or organize instead of putting in the living room. My paternal grandma is a straight-up hoarder, though.

    Living in a consumer society confuses hoarders, too, because they’re often drawn in by bargains and the fear of missing out on goods. I don’t think people in the past had enough stuff to hoard, so even if their brains were somehow messed up, they might have acted out in a different way or collected bits of string. There’s a big difference between hoarders and savers, because hoarders can’t tell quality and are frequently bad at planning, prone to depression, etc. It’s probably not a trait ever selected for; whatever screws up the brain in the first place is effecting decision making.

    I once did a paper on compulsive hoarding (a few years before it became a cultural zeitgeist) for some low-level psychology class, and the professor thought the existence of the Collyer brothers hilarious.

    Sorry for all the anecdotes (this annoys internet people to no end), but the subject genuinely interests me on a personal level. 🙂

  6. Greying Wanderer says:

    “This may be partly due to differences in time preference, but that assumes that people save for rational reasons, and that may not be the whole story.”

    I think evolution mostly works this way. Random mutations leading to subjectively irrational behavior which just happens to be objectively rational in a particular environment.

    A) I want to show off because i like it.
    B) I want to bury food under my house because i like it.

    A reproduces better in the tropics. B reproduces better in colder latitudes.

  7. Interesting to compute the differences created by the welfare state. About one third of Britons have no effective savings, either a real zero on not enough to last more than a month or two, certainly not a winter. They correctly surmise that it doesn’t matter. The State will provide, and it does. Currently saving in the UK is punished, at a rate of about 3.5% per annum. Nonetheless, as you explain, the saving habit continues. Perhaps the ultimate distinction is between savers and borrowers.

  8. j3morecharacters says:

    Many animals and birds are hoarders. Generally food and building materials. Humans are collectors.

  9. I wonder how neanderthals would survive without food storage. I’m guessing they lacked food preservation techniques such as smoking over a fire, they would at least have possessed strategically placed caches in their landscape.

    It would be nice to see a comparison of food storage practices among temperate to polar peoples with limited to absent agriculture. Of course its now sadly too late to psychometrically compare pure indigenous Tasmanians and Fuegians to northern Australians and Amazonians to check their behavioural traits.

  10. Anonymous says:

    BTW, is this “time preference” thing a trait different than what personality psychology types call “conscientiousness”?

    • RS says:

      C is basically future-orientation, honesty, duty/prosociality. So yes, there is more to it.

      ‘Time preference’ is annoyingly opaque, so I say future-orientation.

  11. dearieme says:

    The mesolithic population of the isle of Jura apparently roasted hazelnuts, presumably to last them through the winter.

    • dave chamberlin says:

      Very little is known about the food storage practices of hunter gatherers in prime food gathering locations so consequently a lot of nonsense is assumed. If they didn’t store caches of high calorie foods like the population of the isle of Jura did then they would in relatively short order be replaced by hunter gatherer groups that did. There are stereotypes made of hunter gatherers that are prevalent that I cannot disprove but in all likelihood are false. They did not go hungry on days when hunting was unsuccessful, more like it was “aw crap, nothing but nut mush again.”When certain nut trees rained a years supply of calories it is probable that these were collected, stored, and protected from other animals and rot. It wouldn’t surprise me if the amerind practice of turning the forest into a food factory by killing the trees that didn’t produce food goes way back in time before the agricultural revolution. More functional than pottery is gourds. They are light, less brittle, and extremely easy to grow in prodigious quantities. Too bad they don’t preserve as well as pottery or we may very well be entirely rewriting mesolithic human history. It is easy from our point of view to dismiss mesolithic man as just not as ingenious as us. From his point of view he might say “You work hard all year round? Sheesh, we work a month a year tops and then go out and hunt for the fun of it.”

  12. RS says:

    > There may have been ways of saving food for hard times (winter, mainly) quite a while ago, at least in cold climates… at least you’d think so. On the other hand, there is almost no sign that Neanderthals had any means of preserving food.

    I’ve always heard sapiens foragers have, and had, no significant food storage that we know of.

    My understanding from Krakauer’s (nonscholarly) “Into the wild” is that you can just cut up meat pretty thin, and dry it over fire on a rack. I’m not sure how long it remains safe this way. But obviously this need not leave an archeological trace. I don’t know if arctic peoples did this in our millennia.

    Obviously beef jerky at the store comes with a dessicant . . . Couldn’t tell ya whether this just preserves flavor, eliminates a 10e-6 chance of botulism, or eliminates a 1/100 chance of botulism.

  13. Patrick Boyle says:

    Reacting to your comment that there have been no findings of food storage by Neanderthals, I looked up Eskimo food storage practices. Both are cold climate non-agriculture peoples.

    The Eskimo have a number of food storage customs, none of which seem likely to leave archeological traces. They seem to live for much of the year off Salmon jerky They also have a product called Stinkhead which is a fermented Salmon head. It is said to smell worse than Limburger. They gather berries in great numbers and eat them fresh. The rest they simple leave outdoors to freeze. They smoke Moose – that means they smoke the meat not that they roll in into joints or powder it for a hookah.

    All of these food storage technologies can be observed in the artic today yet I don’t think any of them would leave an archeological trace.

    • TWS says:

      Some of these practices lead to botulism (sp?) when using modern tools like tupperware. Stinky beaver needs to get air or it becomes toxic.

  14. gwern says:

    > In these new situations, where saving had higher payoffs, individuals that had a greater innate propensity to save ought to have had higher fitness.

    The problem here is that when we look at interest rates, they are very high, in many time periods. Here’s some quotes on that topic from _Farewell to Alms_:

    > All societies before 1400 for which we have sufficient evidence to calculate interest rates show high rates by modern standards [with ~0% inflation].5 In ancient Greece loans secured by real estate generated returns of close to 10 percent on average all the way from the fifth century to the second century BC. The temple of Delos, which received a steady inflow of funds in offerings, invested them at a standard 10 percent mortgage rate throughout this period.6 Land in Roman Egypt in the first three centuries AD produced a typical return of 9–10 percent. Loans secured by land typically earned an even higher return of 12 percent.7

    > Medieval India had similarly high interest rates. Hindu law books of the first to ninth centuries AD allow interest of 15 percent of the face amount of loans secured by pledges of property, and 24–30 percent of loans with only personal security. Inscriptions recording perpetual temple endowments from the tenth century AD in southern India show a typical income yield of 15 percent of the investment.8 The return on these temple investments in southern India was still at least 10 percent in 1535–47, much higher than European interest rates by this time. At Tirupati Temple at the time of the Vijayanagar Empire the temple invested in irrigation improvements at a 10 percent return to the object of the donor. But since the temple only collected 63 percent on average of the rent of the irrigated land, the social return from these investments was as high as 16 percent.9
    > While the rates quoted above are high, those quoted for earlier agrarian economies are even higher. In Sumer, the precursor to ancient Babylonia, between 3000 and 1900 BC rates of interest on loans of silver (as opposed to grain) were 20–25 percent. In Babylonia between 1900 and 732 BC the normal rates of return on loans of silver were 10–25 percent.10 In the sixth century BC the average rate on a sample of loans in Babylonia was 16–20 percent, even though these loans were typically secured by houses and other property. In the Ottoman Empire in the sixteenth century debt cases brought to court revealed interest rates of 10–20 percent.11

    > While Japan could eventually have developed an Industrial Revolution in isolation, at the start of the Tokugawa era in 1603 it had the look more of medieval England than of England in 1760. Interest rates, for example, were still high. In the mid-seventeenth century interest rates for loans made to local governors (daimyo) in anticipation of receipts from the land tax were 12–15 percent, even though these were secured loans. The banking system which developed in the late seventeenth century made loans on real security such as buildings at rates averaging 15 percent, though more creditworthy borrowers could get lower rates.10

    Note that many of these societies were stable, powerful, and had secure long-term rights, and so this is not as trivial to explain away ‘oh, it’s just a huge risk premium’, and we’re dealing with interest rates millennia after the introduction of farming, so any selective pressures should’ve had ample time to work. Clark includes a table of numbers which includes England in the 12-1300s at the exact same interest rate of 10%.

    • ziel says:

      You’re arguing that the cost of lending money , when information spread at the speed of a walking horse, when literacy was 10% of the population, when record keeping required scratching out individual lines on papyrus or lambskin or whatever, when money was 100% backed by gold, and when an individual’s identity could only be verified by his own relatives – you’re saying that 10% annual interest rate was an unreasonable high lending cost? For chrissakes credit cards routinely charge 26% today.

      So what is your point?

      • gwern says:

        > when information spread at the speed of a walking horse, when literacy was 10% of the population, when record keeping required scratching out individual lines on papyrus or lambskin or whatever, when money was 100% backed by gold, and when an individual’s identity could only be verified by his own relatives

        Your points are irrelevant or ignorant. You don’t need literacy for lending money or receipts; see for example, tally sticks, Sumerian clay envelopes, or simple social memory, like the endless genealogies that people can memorize. Money specialists exist in all societies. Oral and social tie can bind together communities very efficiently (if you have no idea what I mean, you could stand a reading of _Seeing Like A State_ or _Debt: The First 5000 Years_.) Further, your incredulity ignores the fact that literacy could vary widely, and yet we don’t see simple explanations of between-society differences totally in terms of literacy rates.

        > you’re saying that 10% annual interest rate was an unreasonable high lending cost? For chrissakes credit cards routinely charge 26% today.

        Yes, it is an unreasonably high rate if *farmers are being massively selected for low discount rates and long planning horizons*. The fact that there are people who pay 26% today only emphasizes the complete failure of evolution to operate as the OP is claiming.

        > So what is your point?

        I made my point very clearly, at least, for anyone who tried to understand what OP said or what I was criticizing.

      • reiner Tor says:

        Somehow in such societies slaves were kept and they couldn’t easily escape, so there must have been mechanisms for enforcement – for example it was very difficult for a person to move into another location. Also it’s not true that their identities could only be verified by their relatives – also by their neighbors, or other people who knew them. Also, people had better memories those times. I remember some ancient times when I was a university student and didn’t have a cell phone. I actually remembered a lot of phone numbers by heart. If you made the contract in front of two (or more) people who had a reputation of being honest and not related to either of the parties involved, you had a reasonably good chance they would testify in favor of you even if you didn’t put anything in writing. Oh, and usually these loans were backed up by property – something which credit cards obviously aren’t. Let me also mention that my credit card never charges me nothing, no interest whatsoever. Strange that I pay my credit card on time. High interest rates only apply to people who are already late.

      • ziel says:

        That’s great but again, in the context of this post, what’s your point?

      • reiner Tor says:

        @gwern: A few remarks regarding the people who are still paying 26%.

        1) I bet they are a higher percentage of certain racial groups than others, with some being subjected to the above mentioned selection pressures and others not so much.

        2) A large percentage of the population was probably not creditworthy two-hundred years ago, but their descendants survived because of the industrial revolution, and they are now paying 26% on their credit cards.

        3) Selection pressures reversed over the past two-hundred or hundred-fifty or so years, so now we might be around 1700 regarding time preference.

        4) The fact that some extremely high interest rates do exist does not negate the fact that interest rates in general are much lower, even though the economy is growing presently but it was stagnating before. (Even in times of growth, it never reached 3% in real terms, not to mention inflation, which is high these days but was rarely high before.)

      • gwern says:

        > That’s great but again, in the context of this post, what’s your point?

        You can lead a horse to water but you can’t make him think, I guess.

        Reiner: you didn’t address the substance of my case, which was basically ‘in all times and places there have been very high long-term interest rates, in complete refutation and falsification of Cochrane’s claims about farmers being selected for low discount rates’

        > 1) I bet they are a higher percentage of certain racial groups than others, with some being subjected to the above mentioned selection pressures and others not so much.

        Why would the selection pressure differ significantly? In most societies, agriculture has been the main food source for millennia, from Europe to Africa to Asia to South America. Pastoralists, hunters, and fishers are generally either minority calorie sources available only to those right by the sea, were small populations (how many people in Mongolia compared to China?), or have since been largely exterminated…

        > 2) A large percentage of the population was probably not creditworthy two-hundred years ago, but their descendants survived because of the industrial revolution, and they are now paying 26% on their credit cards.

        So you’re claiming that the hypothetical selection pressure over the past 5 or 6 millennia was *so* weak and *so* ineffective, that merely removing the selection pressure causing a near-instantaneous rebound after 200 years?

        > 3) Selection pressures reversed over the past two-hundred or hundred-fifty or so years, so now we might be around 1700 regarding time preference.

        Are you claiming that there is a positive fitness pressure in favor of short-sightedness and profligacy? Even though we have things like Clark’s work on the increased reproductive fitness of the wealthy in England?

        > (Even in times of growth, it never reached 3% in real terms, not to mention inflation, which is high these days but was rarely high before.)

        All of the historical interest rates I previously cited were in periods of essentially zero inflation, and so are real interest rates.

      • AB says:

        gwern,

        Could high traditional interest rates be due to monopolistic pricing? In traditional societies, most people were farmers tied to the land and not very liquid. Their wealth was tied up in their plot of land, real capital goods like their tools and farm implements, livestock, etc. And that’s if they were freeholders. They were often in a feudal arrangement where they had fewer ownership rights to real capital, let alone financial capital.

        The supply of loanable funds would have been dominated by the minority of the population not actively working the land, such as specialists in money, merchants who need to be liquid to trade, large landowners who have plenty of non subsistence assets that they can afford to convert to money. This would have given the suppliers significant market power and enabled them to price loans accordingly.

        At the same time, with a large percentage of the population being very illiquid and involved in an occupation with little regular cash flow, demand for loans would have been relatively high.

        Interest rates may have been high traditionally as a result.

        • gwern says:

          You overestimate the coercion involved (stationary bandits don’t like such things since capital needs to be put to use), and if that were the sole explanation, we’d see striking systematic anomalies like interest rates collapsing to near-zero inside cities where your hypothetical monopolists can hold no sway, and yet, the city interest rates are pretty much the same. The Medicis loaned out to Florentines much as villagers would.

      • AB says:

        Financial markets were even more concentrated in cities in the past. There wouldn’t have been much of a market outside cities, no?

      • reiner Tor says:

        @gwern:

        > Why would the selection pressure differ significantly?

        I guess because not every society had winters (in many places you can easily harvest several times a year), which means you don’t need long-term (one year) loans. (Or you need much less of them.)

        Moreover, over the past millennium or so European societies had relatively stable property rights, more so than in most other societies. (Possible exceptions could be found in the Far East.)

        > So you’re claiming that the hypothetical selection pressure over the past 5 or 6 millennia was *so* weak and *so* ineffective, that merely removing the selection pressure causing a near-instantaneous rebound after 200 years?

        No, I actually think selection pressure was quite strong, but the goal post was moving. In the early Middle Ages people might already have been around the goal post (especially since around the collapse of the empire the goal post might have been moving backwards for some time), whereas later it moved further, so there was another millennium of relatively quick change. And this relatively quick change got completely reversed over the past 150-200 years. The UK and France (which were probably ahead of the pack) might already be back around 1700, whereas places like Hungary could be around 1800 (however, 1800 in Hungary might have been equivalent to 1700 in England).

        > Are you claiming that there is a positive fitness pressure in favor of short-sightedness and profligacy?

        Yes, the selection was not merely removed, it was reversed: far-sighted people have less children (already in the 19th century), whereas less far-sighted people don’t care so much about the future (like, what will happen when their family with six children has the additional baby born). Just as IQ (positively correlating with long-sightedness) is now a selective disadvantage (at least up to a point).

        >  All of the historical interest rates I previously cited were in periods of essentially zero inflation, and so are real interest rates.

        Inflation could have been zero on average, but prices were fluctuating (like in times of war they could have jumped several times higher – and they could have reversed as peace was concluded), and there were broader trends in prices as well (like agricultural produce getting cheaper compared to manufactured goods, or silver inflation after the conquest of the Americas by the Spanish).

        Having wrote all that, I cannot claim that I’m unaffected by your arguments. So possibly you’re right, and this interest rate issue has no relevance.

    • Ilya says:

      @gwern
      >Note that many of these societies were stable, powerful, and had secure long-term rights, and so this is not as trivial to explain away ‘oh, it’s just a huge risk premium’, and we’re dealing with interest rates millennia after the introduction of farming, so any selective pressures should’ve had ample time to work. Clark includes a table of numbers which includes England in the 12-1300s at the exact same interest rate of 10%.

      It’s hard to say, but I don’t think the original post is mistaken. I’ve read the book, too, though that was a long time ago. I think it may be a combination of high risk premium (crop failure does happen, Caribbean enterprises can fail), monopolistic pricing (as per AB’s suggestion), as well as (possibly) plain lack of capital and opportunity cost.

      • ziel says:

        “It’s hard to say, but I don’t think the original post is mistaken.”

        Agreed – this interest-rate argument is a red herring. Until the advent of credit cards and government-backed mortgage loans in the post-war era, personal lending simply did not exist. So this was business lending. But the very existence of businesses to lend money to means that people were functioning in a manner far removed from the pre-agricultural environment. How much interest did banks charge PNG farmers in the 19th century, or 19th century Nigerian farmers for that matter?

      • Ilya says:

        @ziel: As a related aside, if you start typing “causes for high interest rates in ” in Google search field, you’ll see these suggestions:
        … ghana
        … uganda
        … kenya
        The real (lending) interest rate in Kenya is pretty high, according to this: http://www.tradingeconomics.com/kenya/real-interest-rate-percent-wb-data.html

      • gwern says:

        > I think it may be a combination of high risk premium (crop failure does happen, Caribbean enterprises can fail), monopolistic pricing (as per AB’s suggestion), as well as (possibly) plain lack of capital and opportunity cost.

        Crop failure does happen sometimes, but how does this explain stable high interest rates in somewhere like Egypt where crop failure rates are about as low as possible? And how does lack of capital and opportunity cost factor in? Are you claiming that there are alternative loans available to peasants and merchants which were so lucrative that a measly 10 or 20% per year isn’t enough? Lack of capital ought to be very quickly remedied – exponentials, remember – and certainly not persist over centuries or millennia.

        > Until the advent of credit cards and government-backed mortgage loans in the post-war era, personal lending simply did not exist.

        Completely false. People loan to each other all the time, from the wealthiest society to the poorest hunter-gatherer: they distribute food, expect payments, call in favors, and so on. Farmers in particular – which is pretty much everyone historically, as already mentioned – find loans useful, to each other or with their merchants or other third-parties. These patterns still persist even in the wealthiest countries: a good example here would be the Amish in America. How does a young Amishman afford skyhigh farm prices? (Skyhigh because of their exponential growth.) Loans from their affinity group are a factor.

        > I guess because not every society had winters (in many places you can easily harvest several times a year), which means you don’t need long-term (one year) loans.

        Show a regression on interest rates and latitude, and note that I already cited Egypt as an example.

        > Moreover, over the past millennium or so European societies had relatively stable property rights, more so than in most other societies.

        So then the interest rates should be *low*, not *high*.

        > Yes, the selection was not merely removed, it was reversed: far-sighted people have less children (already in the 19th century), whereas less far-sighted people don’t care so much about the future (like, what will happen when their family with six children has the additional baby born).

        Do you have even a scrap of evidence for this claim of a post-19th century selection pressure orders of magnitude stronger than the one operating for millennia before?

        > Inflation could have been zero on average, but prices were fluctuating (like in times of war they could have jumped several times higher – and they could have reversed as peace was concluded)

        If inflation is zero on average, then every fluctuation or jump was exactly canceled out by other falls, and a little savings would smooth that over – and notice that again your observations are in favor of low interest rates, if people were trying to acquire wealth to insure themelves against future fluctuations. If you’re worried that in a year bread may skyrocket 10x due to war (even if it later falls to 1/10th), then you should want to invest your money so it can grow and save you later on, not splurge on bread right now and cause a shortage of capital and hence high interest rates!

      • Ilya says:

        @gwern:
        >Crop failure does happen sometimes, but how does this explain stable high interest rates in somewhere like Egypt where crop failure rates are about as low as possible? And how does lack of capital and opportunity cost factor in? Are you claiming that there are alternative loans available to peasants and merchants which were so lucrative that a measly 10 or 20% per year isn’t enough? Lack of capital ought to be very quickly remedied – exponentials, remember – and certainly not persist over centuries or millennia.

        Crop failure is an extremely serious situation, even if it occurs rarely.
        There is also the debt cancellation problem (e.g. your mortgage being forgiven if you are way too deep in debt). David Graeber discussed those issues (even if I disagree with his prescriptions for modern times). See Michael Hudson’s essay about interest rates, which elaborates on the above topics, with actual numbers:
        http://michael-hudson.com/2000/03/how-interest-rates-were-set-2500-bc-1000-ad/

        • gwern says:

          > Crop failure is an extremely serious situation, even if it occurs rarely.

          Yes, it is, although not so much in places with ancient stable trade routes or sea access (like Egypt). However, I’m not sure why you’re bringing that up when it supports my point that people should want to save as a form of self-insurance and hence their savings drive down interest rates (not keep them high as was the case).

          > There is also the debt cancellation problem (e.g. your mortgage being forgiven if you are way too deep in debt).

          Diversification remains now, as it was then, an excellent idea.

          “…I thank my fortune for it,
          My ventures are not in one bottom trusted,
          Nor to one place; nor is my whole estate
          Upon the fortune of this present year:
          Therefore my merchandise makes me not sad.”

          That said, so what? Are you suggesting that every possible debtor was universally in such high debt already that investors had no choice but to charge high rates to compensate for risk of default?

          • Ilya says:

            After reading Hudson’s essay, I’m withdrawing my previous comments. The reasons for these high interest rates were not rooted in economics as we understand it today.

          • Ilya says:

            @ gwern: In other words, in a Malthusian society agrarian society, with land being the only means of sustenance and a guarantee of one’s family’s survival, borrowing capital to expand land was not possible (for if it were possible, it would’ve been done by the monopolistic creditor himself). The only reasonable need to borrow was out of abject necessity. In this case, the rate reflects the propensity of the creditor to make the debtor give up (possibly, a portion of) his personal land use rights. Diversification, unless one was a merchant, was not possible, too: only certain types of crop and cattle could be grown, capital markets were not existent.

            Also, becoming “rich” (i.e. store a lot of crop) for a peon was not easy to do for two reasons: payments to lord and because, unlike today, fertility was much higher. In fact, in Sumer for example, land tended to be owned by temple/king (http://www.unm.edu/~gbawden/328-tempal/328-tempal.htm). Hence, what economics/capital could be talked about in this case other than for merchants?

            • gwern says:

              > In other words, in a Malthusian society agrarian society, with land being the only means of sustenance and a guarantee of one’s family’s survival, borrowing capital to expand land was not possible (for if it were possible, it would’ve been done by the monopolistic creditor himself).

              Not true. There is always ‘marginal’ land which can be invested in, aside from productivity improvements, trade, that sort of thing. In a Malthusian society, this will all be related to the *subsistence wage*, which will in part be set by… discount rates. The lower the discount rate, the more available for investment into the next marginal investment opportunity.

              > Hence, what economics/capital could be talked about in this case other than for merchants?

              That’s a pretty huge area. Merchants’ trade, craftsmen, loans to aristocrats… (It’s like asking ‘yes, but aside from land in the United States, what else is there to invest in other than merchants?’)

              • Ilya says:

                >Not true. There is always ‘marginal’ land which can be invested in, aside from productivity improvements, trade, that sort of thing. In a Malthusian society, this will all be related to the *subsistence wage*, which will in part be set by… discount rates. The lower the discount rate, the more available for investment into the next marginal investment opportunity.

                Productivity improvement was an extremely slow process (think generations). Marginal land? I guess, one’s marginal is someone’s subsistence. On the other hand, Malthusian society is more than economics. What is better: living on a marginal land and having no family or being a warrior?

  15. JayMan says:

    Also, this seems incredibly appropriate: 😉

    George Carlin Talks About “Stuff”

  16. Greying Wanderer says:

    http://en.wikipedia.org/wiki/H%C3%A1karl

    “Hákarl is traditionally prepared by gutting and beheading a Greenland or basking shark and placing it in a shallow hole dug in gravelly sand, with the now-cleaned cavity resting on a slight hill. The shark is then covered with sand and gravel, and stones are then placed on top of the sand in order to press the shark. The fluids from the shark are in this way pressed out of the body. The shark ferments in this fashion for 6–12 weeks depending on the season.

    Following this curing period, the shark is then cut into strips and hung to dry for several months. During this drying period a brown crust will develop, which is removed prior to cutting the shark into small pieces and serving.”

    “Chef Anthony Bourdain, who has travelled extensively throughout the world sampling local cuisine for his Travel Channel show No Reservations, has described hákarl as “the single worst, most disgusting and terrible tasting thing” he has ever eaten.”

  17. The fourth doorman of the apocalypse says:

    OT, but if the can cure trisomy 21 (or so they claim) what else might they be able to cure? Perhaps those who are a little too gay.

  18. Jim says:

    Greying Wanderer – Amerindian tundra hunters buried caribou meat in the ground and dug it up and ate it in the winter. But in line with Chef Bourdain’s observation a very strong stomach was required.

  19. Wanderer says:

    It seems to me that hoarding like that can only exist in sedentary populations.

  20. teageegeepea says:

    agnostic has his own theory of hoarding here.

  21. Anonymous says:

    So now I understand why you don’t come across very many Eskimo Cuisine Restaurants.

  22. reiner Tor says:

    @gwern: You may or may not be right, I’ll only answer this point of yours:

    > Do you have even a scrap of evidence for this claim of a post-19th century selection pressure orders of magnitude stronger than the one operating for millennia before?

    This is a total misunderstanding of my position. I wrote that we’re back at 1700 levels, which means that over the past say 150 years we regressed 150 years. In other words, I expect the selection pressure to be roughly the same, but in the opposite direction.

  23. I’d certainly like to know more about the ridges along chimp and neanderthal finger bones that are there to help the infant cling to the fur of the parent. Can you tell me what is the name of these ridges, how widely distributed they are among the living and fossil primates and do any modern human populations possess higher frequencies of them relative to us? (Some populations like Bushmen and Australians are supposedly more ‘pongoid’ in certain anatomical details like their vertebrae.)

  24. JayMan says:

    So I had the brain fart that obesity might be likened to hoarding; caloric hoarding if you will. In order to cope with food availability, caloric density, and the frequency and severity of food shortages, some people may have developed a strategy that prefers to “hoard” calories, especially when energy dense foods are available.

    It seems that part of the difference between obese and non-obese people today is the propensity to burn food vs. store fat. Overweight people tend to be less “energetic” and less willing to engage in physical activity. This may have something to do with “energy availability”. The “pep” is just not there because it’s being stored. As these fat stores require more food to maintain, we see increased appetite. And the body fat resists any attempt to reduce it (via diet, etc).

    Also with the hoarding analogy, this means that a suite of behaviors likely exists to complement and “feed” the various strategies (sweet tooth, appetite, etc.). These traits would vary along a distribution in the population, and would be different distributed in different population depending on each’s evolutionary history.

    The fact that obesity results from a set of physiological and psychological adaptations that today result in obesity for many means that, contrary to all the crusaders out there, there is no way to reduce the obesity rate, not at least until we learn how to co-opt these drives in a way that produces less obesity. But then, sometimes things just can’t be fixed…

    • reiner Tor says:

      I don’t think one has to be totally in agreement with Gary Taubes in order to disagree with your idea.

      Obesity was much lower in the 1960s than it is now, and food availability seems to have been just as good back then as it is now.

      Moreover, such a hoarding gene confers no advantage whatsoever, fat reserves beyond a certain (small) limit are actually disadvantageous.

      • JayMan says:

        The type of food might matter. Doesn’t mean it is as Taubes says though.

        It wouldn’t be disadvantageous to store fat in the past since few people would get to store it very long.

        Again, think hoarding. Some people obviously go way overboard.

        • reiner Tor says:

          Then again, there were obese people fifty years ago. But since the 1970s obesity exploded:

          I tend to agree with you that there will always be some obese people around (except if we find out the biochemical reasons for that, then we will probably be able to treat even those people), but the majority of obese people today could probably be lean.

          Could be the effect of many genes supporting fat storage, and if you have a too high concentration of those genes, you’ll be obese, if too low, you’ll be a supermodel (if also female).

  25. JayMan says:

    “Then again, there were obese people fifty years ago. But since the 1970s obesity exploded”

    “I tend to agree with you that there will always be some obese people around … but the majority of obese people today could probably be lean.”

    That doesn’t follow. Just because large-scale environmental factors have led to an increase in obesity doesn’t mean that it can be reversed, especially without changing the relevant aspects of the large scale environment. Since we don’t know what those are (all we have is various forms of speculation), nor, if we did know that, how to practically change it, the obesity rate is probably not going to go down.

    “Could be the effect of many genes supporting fat storage, and if you have a too high concentration of those genes, you’ll be obese, if too low, you’ll be a supermodel (if also female).”

    A GCTA has found that at least 42% of the variance in obesity comes from additive genetic effects, so partly, yes.

    The other 33-38% of the variance comes from non-additive effects – genetic “luck” more or less.

    • reiner Tor says:

      Well, with lung cancer we were able to identify (and to a very large extent remove, with all those declining smoking rates in the West) the environmental factor.

      And with lung cancer there’s probably a huge genetic component as well: most people who don’t smoke have a genetic predisposition not to, and even those who smoke and survive to an old age are also genetically more resistant to the negative effects of smoking. Actually, I’d thunk they already had some studies like that, with lung cancer running in families, and that

      So once you identify the cause (and if I had to put money on it, I’d bet it’s sugar and refined carbs), you can remove it.

  26. Pingback: Features and Bugs | JayMan's Blog

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