Investments in roads and cities can form an economy for hundreds of years. Now economists show how one-off investments in education can last as long.
Jesuits arrived late in the country of birth of the Guarani where Brazil, Paraguay and Argentina meet. But their missions flourished until 1767, when King Charles III of Spain expelled all Jesuits from the Spanish empire.
But even 250 years later, people living near the ruins of Jesuit missions complete 10 to 15 percent more years of education and earn 10 percent more than residents of similar cities without missions, according to a study published in the Quarterly Journal of Economics.
Measuring an intangible asset through the ages requires smart techniques. It also requires the perfect natural experiment. Felipe Valencia Caicedo, economist at the University of British Columbia, relied on both.
The analysis of Valencia is one of the most striking studies showing how the proceeds of education and vocational training span generations and even centuries.
A historical experiment
You would need a randomized experiment to really disentangle the education of the disruptive factors that usually belong to it. You would brag whole communities and dump them in a remote region. You would divide them into equal matched treatment and control groups, and carefully observe each person for one or two levels.
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 the Pompeu Fabra University in Barcelona, has long been fascinated by the colonial past of Latin America. He focused on this isolated archipelago of Jesuit missions, because they were free of complications that would make it impossible to disentangle the effects of missions, for example in the megalopolis of Sao Paulo.
Founded in 1534, three decades before building its first South American mission, the Jesuit movement, with its technology and methodology, was well ahead of its time. Important for this study was that the members focused on education. Their Guarani missions were seen as an egalitarian, utopian experiment, earning famous fans like Voltaire and Rousseau.
During the 30 missions that Valencia studied, the Jesuits taught indigenous men and women of the Guarani tribe forging, calculating and embroidery. Those efforts stopped after the Jesuits were expelled.
The clean break was the perfect starting point for an economic analysis.
"Moral considerations aside, for us in the economy, colonialism is a beautiful historical experiment to study things that we care about," said Valencia. "We are not colonialists … but we can study these effects."
Measuring the effects
By merging data from archives in the Vatican, Spain, Paraguay and Argentina, Valencia found sufficient evidence that the training of the Jesuits continued to influence the education and society of the Guarani people closest to the missions.
For every 100 kilometers closer to a mission, poverty rates fall by 10 percent and education increases by about 0.7 years. The effect was sharper 75 or 100 years ago, according to historical data, but as national literacy approaches the maximum of 100 percent, the differences decrease.
For variable after variable, Valencia found the same positive trend. That is not the approval of the Jesuits' methods; he said that his work shows the enduring power of investing in people, not the enduring power of colonialism or Catholicism.
"This document does not say that missions are good," Valencia said. "This article does not say that Catholicism is good or has had no negative effects." This paper also says that people were converting autochthonous people to Catholicism, while they did, but they also learned skills. "
Princeton economist Leonard Wantchekon, who collaborates with Marko Klašnja of Georgetown and Natalija Novta of the International Monetary Fund, used different methodologies, but came to a similar conclusion in an analysis of the long-term effects of missionary schools from the early 20th century in Benin.
Their analysis, published in the same journal, found the benefits of education contagious – a possible reason that the benefits of education remain for generations.
"Children whose parents did not go to school, but lived near those who went to school, did just as well as those whose parents went to school," said Wantchekon. "In other words, ambitions played an important role in intergenerational mobility."
The economist Hoyt Bleakley of the University of Michigan has published several influential works that measure the failure of long-term conditions, ranging from the eradication of hookworms in the American South to river crossings on the east coast. He said that the work of Wantchekon and Valencia demonstrated the sustainability of some investments in human capital.
"These fairly early institutions for building human capital seem to leave a fairly large footprint for generations," Bleakley said. "Maybe for centuries." According to Bleakley, it is difficult to separate the effect of education from that of cultures and institutions that are usually adopted by educated people.
Any statistician of an armchair can tell you that these findings are almost useless if they reflect a third variable, such as a desired location or high population density, which explains both the location of the mission and the level of education. That is why Valencia – like all economists doing this type of research – has made an extraordinary effort to avoid correlation and causality.
Because they arrived after the Franciscans and others claimed that they were the main mission areas, the Jesuits were forced to build their missions in inconspicuous places. Today, the settlements near the missions are not denser than the areas around them. Valencia's analysis of satellite data also shows that they have no temperature, terrain or climate that is more favorable for growing crops. They are also no closer to rivers or the coast.
Valencia found a number of natural control groups. For example, people who emigrated to these communities do not show the same educational trends as the native.
The Franciscans also helped. The mendicant was longer in the area than the Jesuits. It was not removed. But the Franciscans focused more on poverty and health than on education and vocation. Valencia found that, as a result, the economic and educational results of families did not vary according to their distance from the missions of that order.
Perhaps the Jesuits had a supernatural ability to select locations that would later attract skilled people? We can also comment on that. There were countless locations where the Jesuits started a mission, but left quickly for reasons unrelated to the Jesuit economic viability. Even those locations, compared with comparable locations with long-term Jesuit missions, did not have a measurable effect.
Finally, Valencia closed institutions, which development economists see as a likely motive in such matters as these. Brazil, Argentina and Paraguay had different governments, data collections and institutional experiences over the centuries, but they all showed similar trends.
Valencia has not excluded other possible explanations. He also found a few reasons that areas near the missions tend to succeed at higher rates, even today.
People who came closer to the missions were more likely to pass on knowledge from generation to generation. The Valencia survey revealed this not only for missionary skills, such as embroidery, magazine keeping and accounting, but also for traditional medicine and folklore that are not directly related to the Jesuit mission.
Historical descriptions of the missions emphasize vocational training that went beyond agriculture for occupations and service industries. Nowadays, the areas near the missions are more industrialized than their neighbors, and they tend to employ more people in sectors related to the professions emphasized by the missionaries, such as forging and teaching.
This should not imply that the differences remain constant, or that history is destiny. Areas near the missions embraced innovations more easily than their peers. Between 1996 and 2006, farmers who approached the missions in Brazil were quicker to plant new, genetically manipulated soybeans than those further away.
"It's not that things are unchanging," Valencia said. "It is precisely because of this historical human capital shock that people can change faster and adapt more quickly to changes."
The continuing educational and cultural impression of that historic shock – an educational mission shortened a decade before the American War of Independence – is strong evidence that investing in people yields long-term returns.