Why Are Cold Countries Richer Than Hot Countries?

Summary

This video explores the intriguing correlation between climate and economic prosperity, revealing that colder countries tend to have higher GDP per capita than hotter ones. The script delves into statistical analysis, uncovering a negative relationship between temperature and wealth, while addressing outliers like resource-rich hot countries. Theories such as economic selection and the evolution of industrial societies are discussed, highlighting how historical adaptation to harsh climates may have fostered long-term prosperity. The video ultimately challenges viewers to consider how innovation, rather than climate, is key to economic success in the modern world.

Takeaways

• 😀 Cold countries tend to have higher GDP per capita than hot countries, showing a strong negative correlation between temperature and economic prosperity.
• 🌍 A map of the world with color-coding for GDP per capita highlights that the poorest countries are mostly located in hot regions, while developed countries are concentrated outside the tropics.
• 📉 Statistical analysis shows that for every extra degree Celsius in a country's average temperature, GDP per capita drops by $762 annually.
• 📊 The R squared value of 0.09 indicates that 9% of a country's prosperity can be explained by its temperature, with the rest being influenced by other factors like government stability and infrastructure.
• 🌡️ While the temperature-GDP correlation is significant, outliers like Qatar, Bahrain, and Singapore, which are hot but wealthy, complicate the relationship.
• ⚠️ The phenomenon is not a spurious correlation (i.e., not just a coincidence), as there is no hidden variable linking temperature to wealth.
• ❄️ The theory of 'economic selection' suggests that harsh winters in colder regions forced societies to innovate, plan ahead, and store resources, giving them a long-term economic advantage.
• 🌞 Ancient civilizations in warmer climates (e.g., Egypt, Mesopotamia) were wealthier in the past, as agriculture was the primary driver of wealth—this contrasts with today's industrial economy.
• 💡 In modern economies, wealth is driven by innovation and industry, rather than agriculture, meaning that cold countries' early industriousness helped them gain a head start in the industrial age.
• 👥 Cold climates may foster social cooperation, as people are forced to spend more time indoors, which leads to more tolerance and collaboration—traits that can help drive economic success.
• 🌍 While cold countries may have had a head start, places like Singapore show that warmer countries can catch up, thanks to their focus on innovation and adaptation to the modern economy.

Q & A

What is the main correlation discussed in the video between climate and economic prosperity?

The video explores a surprising correlation between colder climates and higher economic prosperity, suggesting that countries with colder climates tend to have higher GDP per capita compared to those in hotter regions.

How does the relationship between temperature and GDP per capita work statistically?

Statistical analysis shows that for every extra degree Celsius in average national temperature, a country's GDP per capita is expected to fall by approximately $762 per year.

What is the R-squared value in the context of this correlation, and what does it signify?

The R-squared value is 0.09, which means that 9% of a country's prosperity can be explained by its temperature. The other 91% is influenced by factors like political stability, infrastructure, and natural resource wealth.

Why are outliers like Qatar, Bahrain, and Singapore considered exceptions to the correlation?

These countries are exceptions because, despite being hot, they are very rich due to factors such as significant natural resource wealth (e.g., oil in Qatar and Bahrain) or exceptional economic systems, such as Singapore's global financial center.

What is the theory of economic selection in relation to cold climates and prosperity?

The theory of economic selection suggests that harsh winters in cold climates forced societies to develop survival strategies, such as storing food, building durable shelters, and planning for the future. This forced innovation helped these societies become more industrious and prosperous over time.

How does the historical context of ancient civilizations challenge the theory of economic selection?

Historically, many prosperous civilizations, such as Ancient Egypt, Mesopotamia, and the Mayans, were located in hot climates. This challenges the theory because these civilizations thrived in warmer environments, suggesting that factors other than temperature were at play in their success.

What shift occurred in the global economy that changed the relationship between climate and wealth?

2,000 years ago, wealth was largely determined by agricultural production, and hotter climates were more conducive to farming. However, with the rise of industrialization, wealth is now driven by industry and innovation, which gave colder countries a head start in the modern world.

What other theories explain why cold climates may foster more prosperous societies?

One theory is that cold climates may lead to more social tolerance, as people spend more time together indoors during harsh winters and need to cooperate. In contrast, warmer climates might lead to more aggressive behaviors, which can hinder cooperation and economic development.

How does the concept of 'spurious correlation' apply to the temperature-GDP relationship?

Spurious correlation refers to the idea that two variables may appear to be correlated due to an external factor, rather than a direct cause-and-effect relationship. In this case, while there is a correlation between temperature and GDP, there is no hidden variable influencing both, making the relationship non-spurious.

What conclusion does the video reach regarding the impact of climate on economic prosperity?

While the correlation between cold climates and wealth is significant, it is only one factor among many. The video concludes that economic prosperity is influenced by a combination of factors, including innovation, governance, and access to resources, rather than temperature alone.