The Physiological Foundations of the Wealth of Nations
Holger Strulik, Carl-Johan Dalgaard
University of Hannover, Germany
Evidence from economics, anthropology and biology testifies to a fundamental household trade-off between the number of offspring (quantity) and amount of nutrition per child (quality). This leads to a theory of pre-industrial growth where body size as well as population size is endogenous. But when productive quality investments are undertaken the historical constancy of income per capita seems puzzling. Why didn't episodes of rising income instigate a virtuous circle of rising body size and productivity? To address this question we propose that societies are subject to a ``physiological check'': if human body size rises, metabolic needs - our conceptualization of ``subsistence requirements'' - rise. This mechanism turns out to be instrumental in explaining why income growth does not take hold and societies remain near an endogenously determined subsistence boundary. When we use the theory to shed light on pre-industrial cross-country income differences we find that 60-70\% of the income differences in 1500 can plausibly be accounted for by variations in subsistence requirements.
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