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Should We Be Having More Babies?

November 18, 2013
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According to the CDC, the U.S. fertility rate fell to another record low in 2012 with 63 births per 1,000 women. In 2007, the rate was 69.3.

During a quick scan of the shelves of one of D.C.’s remaining bookstores, journalist Jonathan V. Last’s new book entitled “What To Expect When No One’s Expecting” caught my eye. The book forecasts an impending American demographic disaster by bluntly declaring that people are having too few babies. This prompted a hasty reaction from me: “But everyone says our population is growing out of control! Aren’t 3.95 million babies named Jacob and Sophia enough!?”  America’s total fertility rate, an estimation of the number of births a woman is expected to have during her lifetime based on current age-specific fertility rates, is 1.88 according to the latest figures from the CDC, a record low. This prophet of population doom argues that even this statistic is misleading because most of our fertility has been “outsourced” as we rely heavily on immigrants to prop up the fertility rate. Not including immigrants in the population profile reveals that America has a fertility rate of 1.5.

At first glance, any devout environmentalist would be thrilled with these shrinking population trends since human total environmental impact is exceeding the sustainable carrying capacity of Earth’s ecosystems. This is reflected by the I= PAT equation with I—the human impact placed upon any ecosystem—being the product of three variables: population (P),  per capita level of affluence (A), and technology (T) or more accurately described as the environmental destructiveness of production techniques. It does not take a environmental economist to realize that a lower global population, and hence a lower P value, will result in less of an impact on our ecosystems.

But an interesting deaggregation of what appears to be out-of-control growth reveals cross-country disparities and cultural differences in fertility rates: Japan has a total fertility rate of 1.3 compared to Mali’s total fertility rate of 6.25. Overall, 99% of the world’s current population growth is in developing countries while the fertility rate in each of the G-8 countries is below 2.1 children per women, the rate needed for a given generation to replace itself.  But environmentalists probably still significantly discount falling fertility rates. It is the absolute number that counts and even assuming that fertility levels will continue to decline, the world population is still expected to reach a staggering 9.6 billion in 2050 and 10.9 billion in 2100, according to the U.N’s medium-variant projection.

Last retorts that a shrinking population that is disproportionately old has dire economic, political, and cultural consequences. According to the U.N., “whereas the number of persons aged 60 or over is expected to more than triple by 2100, that of persons aged 80 or over is projected to increase almost seven-fold by 2100.” Last laments that a global population reduction results in a decrease of human ingenuity: “Low-fertility societies don’t innovate because their incentives for consumption tilt overwhelmingly toward health care.” Negative socio-economic externalities abound like a smaller taxpayer base and labor force and the limited availability of military-age manpower to serve in our armed forces. In 1950, there were 16 covered workers for each Social Security beneficiary. Today, there are a little less than three.

But simultaneously, what can the rationale be of the coerced low fertility rates of the Chinese? Surely the Chinese cannot be dooming themselves to a demographically poor future. And is America really subjecting itself to prolonged economic stagnation via a population implosion? A competing argument can be made that a low fertility rate can actually improve living standards. Until  recently, there were few examples of developing countries with both declining fertility and rising incomes. This has changed as some countries have undergone a Goldilocks generation” of fertility—a generation with a not too high but not too low fertility rate—with the result being fewer dependent youngsters, fewer dependent grandparents, and a bulge of working adults that increase economic output. Also, women comparatively do not have to spend more time raising children and can invest more in the education of the children that they do have and add to the productivity and quality of the labor force.

Because there are fewer dependent children and old people, households are able to save more, and there is more capital and resources that can be accumulated per capita.  Economist Klaus Prettner reproduces these findings in a dynamic consumer optimization model that incorporates endogenous fertility and health investments to show that a fertility decline induces higher education and health investments that are able to compensate for declining fertility under certain circumstances. Even as absolute population levels fall, the “effective labor supply” will actually increase, proving that it’s too simplistic to reduce a country’s economic growth and productivity to a simple population numbers game.

Even as absolute population levels fall, the “effective labor supply” will actually increase, proving that it’s too simplistic to reduce a country’s economic growth and productivity to a simple population numbers game.

Consequently, questions loom about such a key determinant of our environmental and economic future. It is clear that countries concern themselves with two questions: Do we have enough people to support an ageing society? Can we take advantage of the right population numbers to spur economic growth? Viewing these questions through an environmental lens, can we find reassurance in declining fertility amidst competing claims about its effects? Are claims about the global population explosion hyperbolized? Only one thing is for certain. Motivation to stabilize population can be undermined by excessive worry that smaller numbers of young people will be supporting larger numbers of the elderly. The prevailing patterns of behavior and resource allocation can be changed in ways that reduce pensioner/worker ratios and make population stabilization more politically viable. Even if falling fertility can raise living standards—especially the living standards of poor, resource-disadvantaged people—it cannot be an excuse for inaction in the realms of smarter governance and tempered lifestyle patterns in respect to environmental crises and economic stagnation.

UPDATE: The Chinese government announced late last week that they would begin to relax its “one-child policy”. The policy was introduced in the late 1970s to combat rapid population growth but has now resulted in an increasingly aging population and extreme gender imbalance. The change will allow couples the option of having two children if just one of the parents is an only child. Previously, both parents had to be only children.

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One Comment leave one →
  1. Jeff permalink
    November 20, 2013 1:03 pm

    You mention Last’s explanation that “[l]ow-fertility societies don’t innovate because their incentives for consumption tilt overwhelmingly toward health care.”

    Why would an older population’s focus on health care consumption reduce innovation? I’ve heard the argument that a younger workforce tends to be more creative. Or that the smaller workforce will yield fewer innovators. But what about focusing creative efforts on health care reduce the economy’s total innovation? surely the US will still have a great demand for IT innovators in silicon valley regardless of the population distribution of age. will engineers be eschewing other projects in favor for medical tech?

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