We examine the correlation between modern human capital and income among adult men in four foraging-horticultural societies of Bolivia. Despite their remote location, we find results similar to those found in developed nations. We find that: (a) education correlates with 4.5% higher overall income and with 5.9% higher wages and math skills correlates with 13.5% higher cash income, and (b) the positive correlation between education or math skills and income is higher among households closer to market towns. The high returns to modern human capital even in highly autarkic economies might explain why people in those societies reduce investments in the accumulation of traditional folk knowledge.
Although we know much about the benefits of modern human capital in developed and most developing economies (Foster & Rosenzweig, 1996; Angrist & Lavy, 1997; Chiswick, Patrinos, & Hurst, 2000), we know little about their effects in simple, highly autarkic, rural economies of hunters, gatherers, and horticulturalists. Economists rarely study such primitive economies, and cultural anthropologists rarely provide empirical estimates of how modern forms of human capital affect the income, consumption, or wages of foragers and horticulturalists. This reflects the difficulty of measuring the outcomes and of doing formal surveys with such populations. As a result, we do not know whether findings from developed and formal economies about the benefits of modern human capital also hold up in these unique settings. We find that the relation does hold, that those with schooling and basic arithmetic skills earn more. Here, we contribute to the empirical study of how different forms of modern human capital correlate with cash income, wages, and farm production in four societies of foragers-horticulturalists in the Bolivian lowlands.
The information and approach we use is novel in three ways. First, we measure school attainment and skills associated with schooling, such as literacy, arithmetic skills, and Spanish-speaking proficiency. We measure skills because failure to control for skills when estimating returns to schooling can bias the estimate of schooling (Rivera-Batiz, 1990 and Rivera-Batiz, 1996; Charette & Meng, 1994; Chiswick, & Miller, 1992 and Chiswick, & Miller, 1999; Dustmann, 1994; Chiswick, 1991; Dustmann & van Soest, 2000; Dustmann & Fabbri, 2000; Angrist & Lavy, 1997; Chiswick & Repetto, 2000). Researchers who use public-use data sets to estimate the effect of schooling or language proficiency on economic outcomes generally cannot control for skills because most such data sets generally include only questions on formal schooling and on speaking proficiency in the dominant language or in the mother tongue of the immigrant (Chiswick & Miller, 1988; Lecker, 1997; Shapiro & Stelcner, 1997; McManus, 1985 and McManus, 1998; Heum Park, 1999; Bloom & Grenier, 1996; Kossoudji, 1988). Second, we use observed rather than self-assessed measures of skills.1 Since random errors from misclassification produce an attenuation bias, we believe this to be an important improvement. Last, we did the research among four ethnic groups to observe whether the findings hold across different cultures, albeit in similar economic settings.
The results of this study suggest that even in highly autarkic foraging and horticultural economies that have yet to undergo structural transformations, education and skills in arithmetic correlate in positive ways with economic outcomes. For instance, men living close to market towns who knew arithmetic obtained 71.40% higher value from their farm output and 12.78% higher overall income than their nearly identical counterparts living farther away. After controlling for skills in arithmetic and reading and for a broad range of other cov-ariates, each additional year of education correlated with 4.50% higher overall income and with 5.90% higher wages.
We conclude with a reflection on the possible implications of the study for our understanding of the worldwide waning of folk knowledge. For many years, cultural anthropologists have documented the passing of folk knowledge among traditional peoples. Rich corpus of folk knowledge about the local environment disappear fast as highly autarkic people gain a stronger foothold in market economies. Bodies of knowledge that drew on personal experiences and that grew slowly over millennium disappear overnight and forever. The public and academics have lamented the erosion because it represents the irreversible loss of humanity’s heritage and diversity, particularly for poor nations.
The results of this study might help to explain why. Even among people in highly autarkic economies, schooling produces many desirable outcomes. By themselves and without prodding from outsiders, parents in highly autarkic settings probably realize that modern human capital yields larger dividends than folk knowledge. Given the tradeoffs parents and students face, people in relatively autarky—facing different returns to investments in different forms of human capital—will start to forget and devalue one form of knowledge to make room for the other, and invest in the acquisition and accumulation of one at the expense of the other.
