The origins of monetary income inequality: Patience, human capital, and
division of labor
Victoria Reyes-García, Ricardo Godoy, Tomas Huanca, William Leonard, Thomas
McDade, Susan Tanner & Vincent Vadez
Evolution and Human Behavior, January 2007, Pages 37-47
We present an explanation about the origins of monetary income inequality
when an economically self-sufficient society opens to a market economy. The
chain of associations runs from patience, to the accumulation of different
forms of human capital, to self-selection into different occupations, and to
the division of labor, which contributes to monetary income inequality. In a
self-sufficient society, patience is exogenously determined and people rely
on folk knowledge as the only form of human capital. With the establishment
of schools, patient and impatient people sort themselves out by the type of
human capital they begin to accumulate. Impatient people do not acquire folk
knowledge because return to schooling takes many years to bear fruit.
Schooling opens opportunities in occupations outside the village, whereas
folk knowledge enhances employment opportunities that draw on farming or
foraging. Self-selection into different occupations with different earnings
potential spawns monetary income inequality. To test the explanation, we
draw on data from a foraging–farming society in the Bolivian Amazon, the
Tsimane'. We collected data during four consecutive quarters in 1999–2000
and a follow-up interview (2004). Data came from 151 adults (age, 16 years
or more) from all households (n=48) in two villages with different levels of
market exposure. During 1999–2000, impatience was associated with (a)
greater folk knowledge and fewer years of schooling, (b) lower likelihood of
working in wage labor, and (c) greater likelihood of working in rural
subsistence occupations. People who had been patient in 1999–2000 had
greater wage earnings and more modern physical assets in 2004.
Is patience a virtue? Or is it just luck of the draw in preferences, a low discount rate, so you value future consumption?
And, interesting that they invoke division of labor. Adam Smith pointed out how little, in fact, people differ at the outset. It is the development of specialized skills, through division of labor, that create the big difference. As Smith says:
The difference of natural talents in different men is, in reality, much less than we are aware of; and the very different genius which appears to distinguish men of different professions, when grown up to maturity, is not upon many occasions so much the cause, as the effect of the division of labour.*46 The difference between the most dissimilar characters, between a philosopher and a common street porter, for example, seems to arise not so much from nature, as from habit, custom, and education.
46: [This is apparently directed against Harris, Money and Coins, pt. i., § 11, and is in accordance with the view of Hume, who asks readers to 'consider how nearly equal all men are in their bodily force, and even in their mental powers and faculties, ere cultivated by education'.—'Of the Original Contract,' in Essays, Moral and Political, 1748, p. 291.] (WoN, I.2.4)
(Nod to KL, who isn't patient at ALL)