My main beef with the Pomeranzian modern economic history literature is that it gets the explanandum wrong. What needs to be explained is not why the world was polarized in 1800, with Europe taking the lead over other core regions of Eurasia (India, China, Japan). But rather why did the world become polarized from the late-nineteenth century onwards. Another misunderstanding relates to latitude, often thought of as a constant conditioner. It is anything but. Latitude, rather effective temperature for which latitude is a good proxy, is a dynamic variable whose conditioning of societal paths has itself been conditioned by technology and knowhow. To wit, it mattered that industrial work could not be performed in low latitude nations with the same intensity as high latitude nations because of the thermal balance equation. A fruitful strategy to towards answering Yali’s question is to ask, What is the history of the latitudinal gradient? When precisely did high latitude nations pull away decisively from low latitude nations?? The answers one obtains are consistent with a very late departure.
Auke Rijpma has developed a panel dataset of an index of composite well-being derived from life expectancy, urbanization rates, stature, maternal mortality and so on. In this dispatch, we’ll look at the evolution of the latitudinal gradient in this measure. The data is obtained from Clio-Infra.
Our task is simple. We project the index onto latitude for each decade from 1820 to 2000 and examine the diachronic or temporal pattern that emerges. That will allow us to establish the fact of Recency. We begin with the slope coefficient. The structural break appears to be 1860-1880. But let’s dig further.
What happens when we control for volatility? The next figure displays the t-Statistics. The structural break in 1860-1880 now appears to be located precisely in 1870.
But how much variation does latitude actually explain? The next figure displays the percentage of variation explained. From 1830-1860, the latitudinal gradient explains around 10 percent of the variation. That jumps to 25 percent in 1870. It continues to rise intermittently to 40 percent in 1980. That’s the full hockey-stick right there.
Again, let me emphasize that this is merely the explanandum. We have established the fact of a structural break in polarization along latitude around 1870. What is required is a compelling account of how and why this obtained then. And most importantly, why the Industrial Revolution failed to spread beyond the northern core. We can’t do that if we obsess over the British textile boom in 1760-1830. It is time to abandon Whiggish discourses of British self-congratulation.
Postscript. We can also test the Matthew Effect. (“For unto every one that hath shall be given, and he shall have abundance: but from him that hath not shall be taken away even that which he hath.”) We simply project change in the wellbeing index during a decade onto the level of well being at the beginning of the decade. The slope can then be called the Matthew coefficient. Positive values denote divergence (the already well-off becoming even more well-off relative to the less well-off) while negative values denote convergence.
The pattern that emerges is very interesting. The coefficient is extremely unstable in the ancien regime, ie until the structural break in 1870. In that decade the Great Divergence begins. There are three major waves of divergence: turn of the century, interwar, and postwar. Divergence stops in its tracks after 1980. That’s a very tight representation of the hockey-stick and the attendant divergence in everyday living standards between the core and periphery of the modern world economy.