Demography & Development: Fruitful Multiplication

This article was originally published on Sustaining Capabilities.

For millennia, there was very little change in the number of humans. While there is no way to be certain of exactly how many people there were in the distant past, researchers estimate that as few as 4m people lived on earth in 10,000 BC — roughly half of London’s population today — and the growth rate between 10,000 BC and 1700 was just 0.4% annually. Like so many other measures of physical well-being and consumption, the global population skyrocketed in the 19th and 20th centuries, as shown by the chart below, with the peak growth of 2.1% occurring in 1962. Today there are about 7.6 billion people on earth, and that number is projected to reach 10.9 billion around 2100, before reaching a peak and slowly declining.

Before getting too far, a few definitions are in order. In demography, birth rate refers to the number of births in a year, and death rate to the number of deaths in that year, each counted per 1,000 people. The difference between the birth rate and death rate, plus migration, constitutes a country’s population growth rate, usually expressed as a percentage of total population. The final important figure is the fertility rate, which is the number of children born to each woman, assuming she lives to the end of her reproductive life, and experiences the current average number of children as her cohorts. Any biological population that maintains a consistent fertility rate of over two offspring per female will experience exponential growth, so two offspring per female is sometimes called the “replacement rate,” because it is the fertility at which a population will neither increase nor decrease.

For the vast majority of human history, birth rates and death rates were both high. Women had lots of children because few survived to an old age, and because job opportunities for women were relatively low. However, around the late 1800s both mortality and fertility began to fall, trends which continue to this day. If mortality and fertility both fell at the same time, there would be only small, if any, changes in the overall population. As such, the fact that world population has risen spectacularly suggests that the of the timing of rate changes is important. There is a pattern of demographic change that is so common that it is often referred to simply as “the demographic transition.” The demographic transition occurs in three stages.

The first stage is characterized by high mortality rates and high birth rates. This was the world described by Thomas Malthus, who famously surmised that populations multiply geometrically (that is, 1–2–4–8–16), while food does arithmetically (1–2–3–4–5). Since geometric growth will always outpace arithmetic growth, humans would always outpace their food supply. Involuntary checks on population like war, famine, and pestilence usually prevented the population from getting out of hand, but Malthus believed that without these checks, the only way to prevent overrunning resources would be to increase the death rate or decrease the birth rate using voluntary methods like marrying later or using contraceptives, and in more extreme cases by forgoing healthcare or committing infanticide. However, fortunately for modern humans, Malthus was wrong about the reproduction rate of crops. There is no special reason that they cannot also multiply geometrically. Indeed, humans have found ways to dramatically increase agricultural productivity in the centuries since, reducing the need to make such wildly unpleasant choices.

The second stage of the demographic transition sees population health improve, resulting in lower death rates. This occurs both because child mortality declines, resulting in a higher probability of surviving past the age of five, and because of better healthcare overall, extending life into old age. Despite improved mortality though, birth rates remain high. One reason that changes to birth rates occur slower than changes to morality is that birth rates are high in the first place in order to increase the likelihood that some children survive to adulthood. When this concern ceases to be an issue, families may still choose to have a lot of children in case the trend toward lower child mortality proves to be impermanent. Further, social norms around family size are more likely to push against change than accelerate it, which also acts to slow the rate of change. This stage describes early modernity: knowledge of the world is rapidly increasing, which simultaneously leads to improvements in population health, and boosts agricultural productivity. On average, people are able to live longer, healthier, and more stable lives during stage two than they were able to during stage one.

In the final stage, total population growth begins slowing, as women have fewer children. There are many reasons families might decide to have fewer children, most of which are associated with advanced economies. For example, economies typically undergo structural changes over time, moving away from labor-intensive manufacturing and agriculture, toward services and highly-mechanized production. In this world, children are less economically beneficial to families. Additionally, women tend to grow more empowered and socially supported as societies become wealthier. As women become better educated, the returns to their work increase, and eventually the economic calculus shifts such that it makes more sense for them to work at least part of the time than to be full-time mothers. Finally, by this point in the demographic transition, families have internalized the fact that child mortality is low. Since it is no longer necessary to have many children, they have an incentive to spend more resources on each child’s upbringing and education.

Eventually, countries reach a point where death rates are low, and birth rates remain at or below the replacement rate, keeping populations about constant. Most of today’s wealthy countries are in stage two or three of the demographic transition. Going forward, mortality is unlikely to rise rapidly, so the long-run population depends primarily on birth rates. One way to visualize the overall pattern of the demographic transition is the population pyramid diagram, shown below. Beginning with the inner layers and moving outward, the layers first get wider and taller, representing improved childhood and elderly mortality, before becoming something like a square with an ever-higher top level, representing the overall aging of the population.

Most countries have experienced some version of the demographic transition, but the time it has taken for them to move through each stage has varied widely. Today’s high-income countries took about 100–150 years to move from stage one to stage three, but many low- and middle-income countries are on track to do the same in half the time. The income at which each stage occurs has also varied widely between countries. Three South Asian countries provide an illustrative example. Japan was one of the wealthiest, most industrialized countries in the world when its population peaked and began declining, South Korea became rich right about the time it began growing old, while China began growing old before it became rich. Each of these scenarios involves unique challenges: growing old before rich makes it harder for a country to become fully-industrialized, while growing rich before old means that a large number of productive workers exit the workforce at the same time, and that those workers expect a high standard of living in retirement.

When considering population’s impact on the economy, it is important to distinguish between aggregate and per capita levels. In terms of the aggregate level of economic growth, the Solow Model suggests that an increasing population will increase a country’s total level of output. This makes intuitive sense because more people means more workers making things. There is a term in economics, the “demographic dividend,” which refers to a stage of the demographic transition during stage two, in which a relatively large share of the population is of working age. After World War II, there was an economic boom in America as droves of baby boomers joined the labor force. This flood of workers into the economy caused the creation of many new firms and institutions to absorb all the labor, and enabled the government to collect enough taxes to easily fund pensions and other obligations.

However, for a constant level of output, population growth reduces personal incomes because there are more people per unit of output. This implies that a rate of population growth equal to the rate of output growth would offset the output growth, keeping incomes constant. A rate of population growth that outpaces the rate of output growth actually shrinks incomes over time. As such, the total size of China’s economy is roughly the size of America’s, but the average Chinese citizen is much poorer than the average American. This sort of effect can create Malthusian pressures on a country, increasing the possibility of a population outpacing its physical resources. Fear of just such a situation has led to publications like The Population Bomb by Paul Ehrlich in 1968 and The Limits to Growth by The Club of Rome in 1972, as well as coercive government efforts to limit population like China’s “one-child policy” and India’s sterilization campaign.

It is also important to distinguish between aggregate and per capita values when it comes to population and the environment. It seems obvious that higher populations might increase the level of material consumption and environmental degradation. Indeed, they do. A common phenomenon for biological populations is exponential growth for a period, before hitting its physical limits and leveling out. A number of researchers have tried to quantify where earth’s limits are, and have come up with initiatives including a set of nine planetary boundaries, which set a “safe operating space” for humanity, and Earth Overshoot Day, the day of the year at which humanity passes ecosystems’ capacity to regenerate. According to the groups which monitor these targets, humanity has already surpassed four of the nine planetary boundaries, and Earth Overshoot Day will fall on July 29 in 2021.

However, for a constant level of production, a higher population results in a lower environmental impact per person. China’s annual carbon emissions are roughly twice America’s, but the average Chinese citizen is responsible for far less carbon dioxide emissions than the average American. Just like many have worried that growing populations might eclipse output, it is also common to be concerned that they might accelerate environmental degradation. Just like the relationship between population and incomes is far from straightforward, though, so too is that between population and environmental impact.

As it turns out, coercive family planning measures create lots of social pain and do little to reduce birth rates, never mind that population is not the only thing that affects a country’s environmental impact (its level of personal income, its citizens’ consumption patterns, and its technology also play a role). Additionally, determining where exactly the planet’s limits lie is highly uncertain because ecosystems have lots of moving parts, and models are sometimes adhered to more vigorously than they are tested. But still, earth is fundamentally finite — there is no way to make more arable land, fossil fuels, or iron ore within any meaningful timeframe — and more humans deplete natural resources faster, holding all else constant. Fortunately, all else need not be held constant. Productivity growth, the process of using ever-fewer inputs for a given amount of output, both alleviates Malthusian pressures, making it possible for more people to have higher standards of living, and reduces the environmental impact of those people, reducing the chances of surpassing earth’s ecological boundaries. It has been the main driver of historically-improving living standards, as well as one of the driving forces behind the Environmental Kuznets Curve.

There is one gigantic paradox about productivity, though: lots of evidence suggests that economic dynamism and innovation, two key drivers of productivity growth in the long run, are linked to… higher populations! So while it seems intuitively obvious that fewer people is good, because fewer people means higher incomes, as well as smaller environmental impact, there is actually good reason to be worried about declining populations. This can be thought of as the “mouths” versus the “brains” worldview: one might think that people mostly consume more resources than they contribute, resulting in less for everyone else. However, economic history makes clear that on average, people generate more ideas relative to what they consume, resulting in more for everyone else. Thus a declining population might well reduce the speed of innovation, causing resources to be used less efficiently relative to what they could be. This is a gigantic problem because even though material consumption has been declining in a relative sense for decades (an average American today is both wealthier and requires less material than in the 1970s), it still has been increasing in an absolute sense (America consumes more material today than it did in the 1970s). Getting to absolute decoupling is key to providing fulfilling and sustainable livelihoods.

The link between population and dynamism provides an argument in favor of wealthy countries expanding immigration. It is probably the easiest way to quickly increase the number of working-age people in a country, because even if it were possible to reverse social preferences and norms on a wide scale in favor of more children, any noticeable changes in demographics would be about 20 away. Yet immigration is an imperfect solution to the problem, and probably cannot be a solution forever. Ignoring the political barriers to admitting more people, there are very high costs to families associated with moving abroad, and most host countries want only the highest-skill immigrants, while immigrants have a wide range skill levels. Further, unless trends reverse, there will come a time at which fertility is decreasing everywhere. In the long-term, it is necessary to find ways to boost productivity in the absence of population growth. Something like the notion of progress studies may make a meaningful contribution, but it is a truly massive problem worth using many different avenues to solve.

The age structures that will exist in the next 50 years have never existed in human history. While most regions will be facing falling fertility and declining populations, others like Africa and the Middle East will still have growing, majority young populations. They face other challenges, like experiencing a demographic dividend at a time when machines are displacing workers in formerly labor-intensive industries, and wages remain high in the very same places. Quite a lot is unknown about what the future will look like, but what is certain is that governments should institute regular reviews of policies to ensure that they remain current and appropriate for the country’s demographics over time, and citizens should push for appropriate institutions to manage shared, finite resources as the world continues to get wealthier. Both should begin sooner, rather than later.