Genetic Diversity and Economic Development?

The journal Science reports:

“The Long Shadow of Genetic Capital

Comparative analyses of human genomes have contributed to a spatiotemporal narrative that begins in East Africa and extends to the other continents. These historical traces reveal a decrease in genetic diversity as migratory distance from Addis Ababa increases. Ashraf and Galor present the hypothesis that genetic diversity has exerted a long-lasting effect on economic development Continue reading

—which is quantified as population density in the precolonial era and as per-capita income for contemporary nations—beyond the influences of geography, institutions, and culture. They posit that intermediate levels of heterozygosity allow for a productive balance between the social costs of high diversity and the creative benefits of higher variance in cognitive skills. They show that the optimal level of diversity was approximately 0.68 in 1500 CE, and that this
increased to 0.72 (which is pretty much where the United States sits) in the year 2000, with the most homogeneous country, Bolivia, placed at 0.63 and the most diverse country, Ethiopia, at 0.77. Just how large an effect are we talking about? They estimate that genetic diversity accounts of 16% of the cross-country dispersion in per-capita income; put in another way, shifting the diversity of the United States higher or lower by one percentage point would decrease per-capita income by 1.9%. — GJC Am. Econ. Rev., in press (2012).”

I haven’t read the paper yet, but I can’t quite understand how genetic diversity, isolated from mediating variables like institutions and culture, can affect “and the social costs of high diversity and the creative benefits of higher variance in cognitive skills.” Clearly genetic diversity can affect cognitive skills, but how does genetic diversity affect “social costs?”

I’m looking forward to reading this paper when it comes out though since the policy implications are substantial.