Friday, June 28, 2024

Post 47: The Population Crisis That Isn't - Part 1

 It seems that there is a nearly endless list of “crises” which are threatening to destroy the earth, the human race, or at least our way of life.  Will Russia use nuclear weapons in an attempt to win their war in Ukraine?  Will global warming turn the earth into an uninhabitable wasteland?  Will the current economic malaise turn into another Great Depression?  Will the USA be sucked into a war with China over Taiwan?  Will either (or both) of our presidential candidates fall into full senility before the election?  I’m surprised I can sleep at night.

Lately, another crisis has been dumped on our already overflowing plate:  low fertility rates and the impact that will have on the human population.  That expert on all things – Elon Musk – recently was quoted saying that “Population collapse due to low birth rates is a much bigger risk to civilization than global warming.”  He has also been quoted as saying “. . . let’s not gradually dwindle away until civilization ends with all of us in adult diapers, in a whimper.”  Finally, at a conference on artificial intelligence in 2019 he said that “Assuming there is a benevolent future with AI, I think the biggest problem the world will face in 20 years is population collapse.” [1]  Fortunately for all of us, he is on the job and doing his part.  Musk has reportedly fathered 12 children with three different women and recently got into hot water for apparently asking a SpaceX employee to “have my babies” or something of the sort. [2]  Not surprisingly, that woman later left the company with a very healthy exit package.


But it is not just Elon Musk ringing the alarm bells.  Last fall the New York Times published an op-ed piece written by Dean Spears, an Assistant Professor of Economics at the University of Texas entitled “The World’s Population May Peak In Your Lifetime.  What Happens Next?”  In the article, he writes about the likelihood of world population peaking before the end of the century and then rapidly declining over the next two centuries.  He includes a graphic which appears to show (the graphic has no scale) world population dwindling to virtually nothing and he laments the millions (or billions) of lives not lived had birth rates only remained high.  Unfortunately, he does not provide any information on what the quality of those lives would be like if world population were to continue climbing without end.



Numerous other articles have been written on declining birth rates, although most of them are considerably less apocalyptic, and they continue to show up in my news feed on a weekly if not daily basis.  My goal with this blog post is to put the issue into perspective and give you the facts to form your own opinion.  Yes, declining birth rates pose challenges for both governments and our society as a whole.  But the changes will happen relatively slowly compared with other societal challenges, the trends are reversible, not inevitable, and there are parallel changes taking place elsewhere in our society that may well minimize the negative effects of slowing (or even negative) population growth.


The Basics of Population Change


At the most rudimentary level, population change is determined by the number of births minus the number of deaths in any given year.  Both of those numbers are variable and difficult to predict precisely – especially as you move further and further into the future.  This is particularly true of the death side of the equation because it is subject to the effects of war, plagues and pandemics, famine, poor medical care, etcetera, etcetera, etcetera.  Births are a little more predictable but are also variable due to the effects of contraceptive availability, religion, economic well-being, and several other factors.


The impact of time is crucial because population change in one generation is compounded (both positively and negatively) in future generations.  If you get something wrong in a population projection, the mistake is magnified by each subsequent generation.  Thus, the further into the future you project, the sketchier population estimates become.  In my opinion, population projections more than 20 or 30 years into the future are tenuous, more than 50 or 60 years are just guesses, and projections more than 100 years into the future are fictional.  Given the current pace of change, we have no idea what the world will be like in 2124 and that includes not knowing the fertility rate of women in the next century.  Yes, we can extrapolate the current trend lines (a la Dean Spears and others) but that is a meaningless exercise because it ignores the human ability to evaluate the current situation and act independently of what previous generations have done.


To illustrate just how crazy long-range population estimates can be, look at the projections for world population done by the United Nations (one of the more respected projection sources).  They do multiple projections using different assumptions and then use the median result as their preferred estimate.  As of 2022, that median estimate for world population in the year 2100 is just over 10 billion people.  But the  range of all projections goes from a high of 14.5 billion to a low of 6.5 billion people – a spread of 8 billion! [3]  The fact is that no one knows which demographic assumptions are correct. 


Hopefully, that line of reasoning dissuades you from worrying about the population numbers in the next century and beyond, and particularly from losing sleep over the extremely unlikely scenario that human civilization will be threatened by the population dwindling to almost nothing.  There are however, good reasons to look at fertility rates, human longevity, and economic growth over the next several decades to think about what might happen to our society if current trends do not change.  Not that things can’t change, but if they don’t there will be significant impacts on our society and on the decisions that governments will be forced to make to keep our world moving forward.  


To put a little more sophistication into the births minus deaths equation, there are a couple of factors that should be discussed in order to really understand what the current brouhaha is all about.  In particular, the birth side of the equation is dependent on the number of women who are in the appropriate age range for giving birth (generally assumed to be 15 to 50) and the average number of births per woman during their lifetime.  It is that last number, often referred to as the fertility rate, that is at the core of current concerns.  Women over much of the world are having far fewer babies than they used to.  So few, in fact, that the population of some countries is falling and many more are on the cusp of falling.


Centuries ago, childhood mortality was so high that women would need to have six or eight children just so that two or three would survive into adulthood.  The birth rate was high but longevity was so low that total population grew at a snail’s pace.  Advancements in medical care, child care, and economic well being have greatly reduced childhood mortality rates in most parts of the world.  So much, in fact, that if the average woman has 2.1 births during her lifetime the population would eventually stabilize.  That 2.1 number is known as the “replacement rate.”


The problem is that the fertility rate has been dropping rapidly.  Worldwide, the rate is estimated to be about 2.3 births per woman (down from nearly 5 births per woman in 1970) and is much lower in many countries.  In the US the rate is 1.7, in Germany it is 1.5, in Japan it is 1.3, and in South Korea it is 0.8.  


To illustrate how all of this plays out over time, let’s look at what has happened to China over the past 60 years.  China used to be the world’s most populous country (recently replaced by India) and in the 1960s it had an average fertility rate of over 7 births per woman.  The concern of the Chinese government at that time was over-population despite the fact that the birth rate was falling rather quickly.  In 1980, China instituted the “one child policy” which had two primary effects.  First, it caused the fertility rate to drop even further, from 3.6 births per woman in 1975, to 2.6 births per woman in 1985, to 1.6 births per woman in 1995.  The one child policy was officially dropped in 2015, but fertility rates have continued to decline to approximately 1.2 births per woman in 2022.  


Second, the one child policy caused a distortion in the Chinese gender balance.  In Chinese culture, the bloodline is passed down through the male side of the family, so if only one child is allowed, there is a strong preference for a male child rather than a female one.  This preference was implemented through abortion, infanticide and sending female babies off for adoption to the point where China now has roughly 30 million more men than women. [3]  


This situation is a double-whammy for China’s population because not only are birth rates low, but there is an unnaturally low number of women that are of prime childbearing age.  The result is that for the first time in many decades, China’s population is falling.  To be clear, there are still more than 1.4 billion people in China, but that number could fall below one billion by the end of the century.  In addition, the Chinese population will age fairly rapidly and will eventually reach the point where there are more people outside of normal working ages (younger than 15 or older than 65) than there are people of working age (15 to 65).  That ratio, known as the dependency ratio, has obvious implications for the Chinese economy and society.


What is happening in China is an example of what is happening in several other countries and a preview of what is likely to happen in many more countries in the near future.  It is not, however, an illustration of what is happening everywhere.  Globally, the population is still increasing, particularly in sub-Saharan Africa.  The world’s population just recently passed 8 billion people and is expected to reach roughly 9 or 10 billion before the end of the century.  Thus, the issue – at least for the foreseeable future – is not so much the total population of the world, but the distribution of that population on a country by country basis, and the distribution by age range within each country.  


That is the discussion that really needs to take place.  A thoughtful discussion of our future is always a good idea, and to be fair, that is a part of what Dean Spears was advocating in his op-ed article.  I hope to make you aware of the issues and the data to an extent that you can be an effective participant in that discussion.  For the remainder of this post – and the second part which will come soon – I am going to focus primarily on the USA, although I will occasionally reference other countries for comparison.


Population Trends in the United States


The population of the U.S. has grown almost uninterrupted throughout its history, and recent decades are no exception to that trend.  Looking at the past 100 years on a decade by decade basis, the slowest growth (both as a percentage of change and in total population numbers) occurred during the 1930s.  The largest percentage change occurred during the 1950s and the biggest change in total population took place during the 1990s.  What is remarkable is the consistency of population growth for that entire time with only a couple of minor fluctuations.


Source:  US Census Bureau

All of this has taken place despite the fact that fertility rates have dropped considerably during that time, particularly from roughly 1960 to 1975 when effective birth control options became much more widely available.  In 1960, the fertility rate was 3.7 births per woman but had fallen to 1.8 by 1975.  The fertility rate bounced back for much of the 1990s and early 2000s to around 2 births per woman, but has fallen steadily since about 2008 to a rate of 1.7 births per woman today.


When you are focused on the population of a single country versus the entire planet, migration is another factor that needs to be added to the population equation.  The number of births minus deaths is known as “natural” population change, but total change is natural change plus (or minus) migration.  In the case of the U.S., that has consistently been a significant “plus” factor throughout our history.  Although there is a considerable amount of political controversy over immigration at the moment (particularly illegal immigration), the current number of immigrants living in the U.S. expressed as a share of total population is virtually identical to the immigrant share from 1850 to roughly 1930.


Compare that to China which has experienced out-migration virtually every year for the past several decades.  Although precise numbers are hard to find and can fluctuate dramatically from year to year, the average out-migration for the past 30 years has typically been roughly 250,000 people.  This is now a triple whammy for the Chinese population (low birth rates, fewer women, and out-migration) which will have economic and political ramifications for years to come.


So what impact does all of this have on the U.S. population going into the future?  Census Bureau projections – again based on assumptions that may or may not prove true – show the total population growing to roughly 370 million people by 2080, and then falling back slightly to 366 million by the end of the century.  Natural population change (births minus deaths) turns negative somewhere in the early 2040s, which means that immigration becomes the driver for population growth.  Assuming that all of this is correct, that still means that our country will have 30 to 40 million more people by the end of the century than it does today – hardly a “population collapse.”


The Changing Face of Age Distribution


A more serious issue is the impact that declining birth rates will have on the number of children, the number of workers, and the number of elderly people.  Those changes will have serious ramifications for school enrollment, economic growth, senior living/senior care arrangements, and many other aspects of community life.  Those ripple effects will affect both government expenditure patterns and government revenue streams at the local, state and national levels.


Demographers have traditionally used what is known as a population pyramid to illustrate the age and sex distribution of a given population.  It is essentially a specialized chart that shows the share of the population that is male or female, broken down into five-year cohorts.  See, for example, the population pyramid for the United States in 1970 below.  The male share of the population is on the left and the female share is on the right, with age groups from 0 to 4 at the bottom ranging to over 100 at the top.



Source:  PopulationPyramids.net




For the purposes of this analysis, I’m going to focus on four specific groups:  (1) children aged 0 to 15, (2) working age adults aged 15 to 65, (3) women of childbearing age (15 to 50), and retired people over the age of 65.  These categories are far from perfect.  Many parents don’t consider their children to be adults until they have graduated from college at 22 (or older).  Most people would actively discourage a 15- or 16-year-old from having a baby even though it might be physically possible.  And many people retire before the age of 65 or work beyond 65.  Still, these categories are reasonable proxies that will illustrate the points I am trying to make.


In 1970, notice that 28.3 percent of the population is less than 15 years of age, while only 9,7 percent are 65 or over.  The working age category (15 - 64) represents 61.9 percent of the population, which means the dependency ratio is 61.3 (the number of “dependents” - under 15 or over 65 - per 100 people of working age).  The share of the population that are females of childbearing age is 23.9 percent.


Compare the 1970 chart to the one for 202o, and notice how much less pyramidal it is.  Only 18.5 percent of the population is less than 15 years of age, a drop of almost 10 percentage points.  The category over 65 has grown to 16 percent, while 65.5 percent are working age.  This means the dependency ratio has fallen to 52.7.  The share of the population that are females of childbearing age has dropped slightly to 22.7 percent.


Source:  PopulationPyramids.net



The changes are even more dramatic if you look at the projected population pyramid for 2060.  The “children” category has fallen to 14.9 percent of the total population, and the “retired” category has risen to 25.7 percent.  The “working age” category has dropped to 59.6 percent, which means that the dependency ratio is projected to be 68.4.  The share of the population that are females of childbearing age has dropped to 20 percent.



Source:  PopulationPyramids.net



The bottom line is that the number of retired people is growing rapidly, both numerically and as a percentage of the total population.  And even though the share of the population that is younger than 15 is falling, the number of “dependents” per 100 people of working age is rising.  Finally, the share of women that are of childbearing age is steadily falling which means that fewer babies will be born even if birth rates stabilize.  This compounding effect is why natural population change will turn negative in less than two decades.  In fact, fertility rates would have to climb back to the replacement rate (or above) for several generations for the population to stabilize.


Why Are Fertility Rates Falling?


Attempts to answer this question have resulted in a great deal of speculation, but I’m not sure there is really a definitive answer.  The decision to have a child or not is an intensely personal one that is subject to multiple, and often conflicting, influences.  Different people in different cultures and different circumstances are likely to reach different decisions.


This is also an area where I suspect there could be a fair amount of confusion between correlation and causation.  Many factors might be highly correlated with declining birth rates but whether they cause declining birth rates is another issue.  Despite the difficulty, I think it is important to try to understand the underlying causes because if efforts are made to reverse the decline, then the more the reasons are understood the more effective those efforts are likely to be.  I am going to present several of the theories that I find most persuasive, but I am certainly no expert so take the following section with a grain of salt.


Increasing female empowerment.  Two factors which are highly correlated to declining fertility rates are increased educational attainment and increased labor force participation by women.  I think they are also closely linked so I’m going to combine them under the heading of female empowerment.  Both education and workforce participation broaden horizons for women beyond the traditional roles of mother and homemaker.  Having a child is no longer the primary way to seek a sense of accomplishment, it is just one way out of several that are open to women who are educated and skilled.  In this sense, an economist might view the decision to have a child as an increased opportunity cost – the more successful a woman becomes the more that having a child is likely to entail giving up or compromising some other personal goal. [5]


Improved contraceptive choices.  Over the last several decades, contraceptives have become more effective, less expensive, more socially accepted, and easier to acquire.  One of the watershed moments, of course, was the release in 1960 of the first oral contraceptive pill, Enovid.  The “pill” and other contraceptive drugs and devices allowed women to shrink the gap between actual fertility and desired fertility.  In this sense, contraceptives are less a reason for lowered fertility than a facilitator of preferences for lowered fertility.  But they also allowed women to avoid unwanted pregnancies which has caused a marked reduction in the number of births.  For example, the teen birth rate has fallen dramatically – from roughly 60 births per 1,000 adolescent females (15-19) in 1990 to roughly 15 births per 1,000 adolescent females today – largely due to the wide availability of contraceptives. [6]


Improved well-being and status of children.  Two other factors closely associated with declining fertility rates are the declining rate of child mortality and the increasing prevalence of child labor laws.  Several hundred years ago over much of the world, and even today in some third-world countries, children were seen as an important economic resource for the family, albeit one that was often cut short by premature death.  Having many children was an economic boon for the household and a way of ensuring that at least a few children would make it to adulthood and be able to care for the parents in their old age.  Now having children is mostly an economic cost that the parents must bear for 18 years or more, although improved medical care has removed much of the uncertainty about children reaching adulthood.  Due to the cost factor, parents must balance the number of children they want versus the amount of resources they want to spend on each child.  Many couples are apparently opting for quality rather than quantity. [5]


Delayed parenthood.  In 2001, the average age of a first-time mother was under 25.  Now the average age of a first-time mother is nearly 28.  This is consistent with the related trend of couples delaying marriage and other markers of establishing a household.  Why this is taking place is, of course, the subject of considerable debate.  Some are blaming the high cost of housing which is making it difficult to shift from the ‘singles’ apartment (perhaps shared with friends) to housing more suitable for raising a family.  Others blame angst over the economic prospects of younger generations.  My personal favorite is the rise of “pet parenting” as a surrogate for actual parenting.  A growing number of young adults are viewing having a dog (or cat) as a substitute – at least temporarily – for having a child. [7]  The result of all of these possibilities is both fewer children and children being born later in life.


What Is Next?


So that is the data, the mathematics, and the theory behind falling birth rates and population as fairly as I know how to present it.  Hopefully I have been able to convey that while there are certainly potential problems that require our attention, this is not an immediate crisis that will inevitably lead to a dystopian future.  The data, however, begs several questions:

  • What would be the impact on our economy, our society and our future if fertility rates stay low (or fall further), the age structure skews toward the elderly, and total population begins to fall significantly?

  • How will the impacts of population change be affected by other changes in our society and in our technology? And, 

  • What can and should governments do if the net impact is perceived as negative or not as positive as we would like it to be?

I hope to address all of these questions in Part 2 of this blog topic – stay tuned!






Notes:


1. Matt Reynolds; “Elon Musk Is Totally Wrong About Population Collapse”; Wired; October 2022; https://www.wired.com/story/elon-musk-population-crisis/


2. Bess Levin; “Elon Musk Reportedly Asked a SpaceX Employee, on Multiple Occasions, to ‘Have His Babies’”; Vanity Fair; June 2024; https://www.vanityfair.com/news/story/elon-musk-reportedly-asked-a-spacex-employee-on-multiple-occasions-to-have-his-babies


3. United Nations, Department of Economic and Social Affairs; “World Population Prospects 2022”; https://population.un.org/wpp/Graphs/Probabilistic/POP/TOT/900


4. Kristal Sotamayor; “The One-Child Policy Legacy On Women And Relationships In China”; Public Broadcasting System; February 2020; https://www.pbs.org/independentlens/blog/the-one-child-policy-legacy-on-women-and-relationships-in-china/


5. Max Roser; “Fertility Rate”; Our World In Data; Revised March 2024; https://ourworldindata.org/fertility-rate


6. “Trends in Teen Pregnancy and Childbearing”; US Department of Health and Human Services, Office of Population Affairs; https://opa.hhs.gov/adolescent-health/reproductive-health-and-teen-pregnancy/trends-teen-pregnancy-and-childbearing


7. Mark Travers; “A Psychologist Explains The Appeal Of ‘Pet Parenting’ For Child-Free Couples”; Forbes; March 2024; https://www.forbes.com/sites/traversmark/2024/03/16/a-psychologist-explains-the-appeal-of-pet-parenting-for-child-free-couples/