Does diversity have a positive effect on economic outcomes? According to a new study co-authored by UC Merced economics Professor Justin Cook, the answer is yes, even when the diversity is imperceptible to the casual observer.
Cook and his former postdoctoral advisor, Professor Jason Fletcher of the University of Wisconsin, wanted to test a contentious hypothesis that argues for a link between genetics and economic development.
According to this hypothesis, societies with more genetic diversity are more innovative.
“Genetic diversity creates different types of people. Different types of people interacting are going to create novel solutions to problems,” Cook said.
This helps explains why diverse societies throughout history have tended to be more prosperous than homogeneous societies. But the hypothesis also postulates a limit to the amount of genetic diversity that’s beneficial to society. Too much genetic diversity causes populations to fragment along ethnic lines, creating societal fissures that impede collaboration.
“Diverse groups generally come up with more creative solutions, but they also cluster and experience infighting,” Cook said.“There’s this kind of goldilocks effect where having too little genetic diversity reduces the society’s ability to innovate, but having too much genetic diversity creates differentiated groups, which tends to cause ethnic infighting.”
It’s a hypothesis that engenders both curiosity and criticism. Detractors assert that it’s merely capturing obvious historical trends. Cook and Fletcher, however, wanted to explore the hypothesis further. But they needed a way to disentangle genetics from other variables associated with global economic development.
“We wanted to retest the idea in a framework that wasn’t so broad,” Cook said. “That’s why we looked at high schools in Wisconsin.”
