Physioeconomics ─ The Basis for Long-Run Economic Growth

According to Philip Parker, the relationship between physics-based physiology andmacroeconomics may come to dominate explanations of economic growth. His argument focuses on theso-called equatorial paradox--the phenomenon that a country's latitude explains up to 70 percent ofcross-country variances in per capita income. After introducing concepts from physics and physiologyas the building blocks of homeostatic utility, he explains the role of homeostatic utility ineconomic growth. Specifically, he shows that a country's performance is gauged not by its absolutelevel of income or consumption, but by how far it is from a homeostatic steady state governed bywhat he calls physioeconomics. Countries closer to their homeostatic steady state grow more slowlythan those farther away.Parker shows how factors such as income, aggregate savings, investment,technology, entrepreneurship, production, and outputs per worker are influenced by the morefundamental principles of physics and physiology. He focuses particularly on the hypothalamus, thepart of the brain that drives motivation, monitors homeostasis, and ultimately keeps us alive vianeural, autonomic, and hormonal adjustments. He presents evidence that long-run growth can beattributed to variances in hypothalmic activity.A physioeconomic approach to growth can lead tobetter economic policies, measures of performance, and predictions of progress. To take just oneexample, policymakers would be quicker to realize that food aid to warmer regions can destroy localfarming economies that supply adequate caloric needs at a lower steady state.