Investments in roads and cities can shape an economy for hundreds of years. Now economists are showing how one-time investments in education can be done every bit as long.
Jesuits late to the Guarani people's homeland where Brazil, Paraguay and Argentina meet. But their missions thrived until 1767, when King Charles III of Spain expelled all Jesuits from the Spanish Empire.
Jesuit missions complete 10 to 15 percent more years of education and earn 10 percent more than residents of equivalent towns without missions, according to a study published in the Quarterly Journal of Economics.
Measuring an intangible asset across centuries requires clever techniques. It also requires the perfect natural experiment. University of British Columbia economist Felipe Valencia Caicedo relied on both.
Valencia's analysis of the results from education and vocational training span generations and even centuries.
A historical experiment
You would need a randomized experiment to truly disentangle education from the confounding factors that usually come with it. You would like to scoop up entire communities and dump them into an isolated region. And would like to divide each other into an epoch or two.
Valencia could not do that, for obvious ethical and practical reasons. But he found the next best thing. The 34-year-old Colombian, who studied economics at Brown, Yale, the London School of Economics and Pompeu Fabra University in Barcelona, has long been fascinated by Latin America's colonial past. He was born in this isolated archipelago of Jesuit missions because they were free of complications that would make it impossible to tease out the effect of the missions founded in, say, the megalopolis of Sao Paulo.
Founded in 1534, three decades before it was built its first South American mission, the Jesuit movement, with its technology and methodology, was advanced for its time. Importantly for this study, its members focused on education. Their Guarani missions were seen as an egalitarian, utopian experiment, earning such famous fans as Voltaire and Rousseau.
At the 30 missions Valencia studied, the Jesuits taught indigenous men and women of the Guarani tribe blacksmithing, arithmetic and embroidery. Those efforts stopped after the Jesuits were expelled.
The clean break made the perfect starting point for economic analysis.
"Moral considerations aside, for us in economics colonialism is a good historical experiment to study things that we care about," Valencia said. "We are not colonialists … but we can study these effects."
Measuring the effects
Spanish, Spanish, Spanish, Paraguay and Argentina, Valencia
For every 100 kilometers closer to a mission, poverty rates fall 10 percent and schooling rises by about 0.7 years. 75 or 100 years ago, historical data shows, but as national literacy approaches the maximum of 100 percent, differences flatten out.
For variable after variable, Valencia found the same positive trend. That is not an endorsement of the Jesuits' methods; he said his work shows the enduring power of colonialism or Catholicism.
"This paper is not saying missions are good," Valencia said. "This paper is not saying Catholicism is good or did not have any negative effects. This paper is even though people were converting indigenous people to Catholicism, while they were doing that they were also teaching them. "
Princeton economist Leonard Wantchekon, working with Marko Klašnja of Georgetown and Natalija Novelty of the International Monetary Fund, used as methodological analysis in Benin.
The analysis of the benefits of education for the future is published in the same journal.
"Children whose parents did not attend school, but they were living for those who attended school," Wantchekon said. "In other words, aspirations played an important role in intergenerational mobility."
University of Michigan economist Hoyt Bleakley has published several influential works that measure the long-term fallout of circumstances ranging from hookworm eradication into the American South to river portages on the East Coast. He said Wantchekon's and Valencia's work showed the durability of some human capital investments.
"These fairly early human capital-building institutions seem to leave a pretty significant footprint for generations," Bleakley said. "Maybe for centuries." According to Bleakley, it is difficult to separate the effect of education from the cultures and institutions that tend to be adopted by educated people.
Any armchair statistician can tell you that these findings are nigh on useless if they reflect a third variable, such as location or high-level density. Which is why Valencia – like all economists who do this type of research – went to extraordinary lengths to tease apart correlation and causation.
Because they arrived after the Franciscans and others claimed first territories, the Jesuits were forced to build their missions in unremarkable places. Today, the settlements are not more densely populated than the areas around them. Valencia's analysis of satellite data also shows They're not closer to rivers or the coast, either.
Valencia found a number of natural control groups. People who immigrated to these communities, do not show the same education trends as the native-born.
The Franciscans helped, too. The mendicant order had been in the area longer than the Jesuits. It was not expelled. But the Franciscans focus on poverty and rather than education and vocation. Valencia found that, maybe as a result, families' economic and educational outcomes did not vary based on their distance to that order's missions.
Maybe the Jesuits had a preternatural ability to select locations that would later attract educated people? We can rule that out, too. There were numerous locations where the Jesuits started to mission but quickly abandoned it for reasons unrelated to its economic viability. Jesuit missions, produced no measurable effect.
Finally, Valencia ruled out institutions, which development economists consider to be a likely driver in cases like this. Brazil, Argentina and Paraguay had wildly different governments, data sets and institutional experiences over the centuries he studied, yet they all showed similar trends.
Valencia did not just rule out other possible explanations. He also established a few reasons for higher rates, even today.
People nearer the missions were more likely to pass knowledge from generation to generation. Valencia's survey showed this not just for the skills of the missionaries, such as embroidery, journal-keeping and accounting, but also for traditional medicine and folklore not directly related to the Jesuit mission.
Historical descriptions of the missions emphas vocational training that went beyond agriculture to trades and service industries. Today, the areas near the missions are industrialized and they are more people employed in industries related to the professions emphasized by the missionaries, such as blacksmithing and teaching.
This should not imply that the differences remained constant, however, or that history is destiny. Areas near the missions embraced innovations more readily than their peers. Between 1996 and 2006, farmers nearer the missions in Brazil were faster to plant new, genetically engineered soybeans than those farther away.
"It's not that things are immutable," Valencia said. "It's that because of the historical human capital shock, that people can change faster and can adapt faster to change."
About the educational shock and an educational mission short about a decade before the U.S. war for independence – is strong evidence that investing in people produces long-term returns.