We find that measures of genetic distance have a statistically and economically significant effect on differences in income per capita, even when controlling for various measures of geographical isolation, and measures of cultural, climatic and historical differences. The effect of genetic distance holds not only for contemporary income differences, but also for income differences measured since 1500. Moreover, the effect of genetic distance holds not only for contemporary and historical worldwide income differences, but also for income differences within Europe. In fact, the magnitude of the effect of genetic distance is larger for a sample of European countries than across countries from all continents.
...On average, populations that are more genetically distant have had more time to diverge in a broad variety of characteristics transmitted intergenerationally. These include characteristics that are passed on through DNA, but also traits that are passed on not through biological reproduction but through cultural transmission.4 As long as these cultural characteristics are transmitted to younger generations from genetically related individuals within their population, they will be correlated with genetic distance.
Therefore, one should not view genetic distance as an exclusive measure of distance in DNA-transmitted characteristics, and should not assume that the mechanisms linking genetic distance to economic distance are necessarily genetic.
It's a weird paper. Their thesis is that innovations diffuse more easily among people who are close genetically, because of shared language, attitudes, and so on. What are the interesting alternative hypotheses?
1. Diffusion is related to geographic distance.
2. Diffusion is related to average IQ.
3. Diffusion is determined by institutions.
The authors explicitly take on (1), not so much (2) or (3). Do we observe market-oriented, high-IQ societies with slow adoption of innovation that can be traced to genetic distance from the innovation frontier? Do we observe centrally-planned, low-IQ societies with rapid adoption of innovation that can be explained by genetic closeness to the innovation frontier? Or are institutional characteristics, IQ, and genetic closeness to the innovation frontier too highly correlated to distinguish among these hypotheses?
UPDATE: Jason Molloy points out in the comments that he already blogged about the paper. If you go to his post, make sure you check out the comments there. The comment that he makes in response to Wacziarg has a number of helpful links.