Sunday, August 31, 2008

Population - the forbidden debate

A newspaper article this morning got me thinking about the untouchable issue of population growth. It is available here. Basically, the article publicised the not so surprising fact that SE Queensland’s rate of population growth is slowing. But what it did mention was the causal relationship between the supply of housing and population growth.

If we are to believe this article then increasing the supply of housing causes population growth – it must be true if the opposite is true. We have probably heard the phrase ‘build it and they will come’. Such a saying did not gain popularity because it is irrelevant. It gained popularity because is very close to the truth. If you would like an rather academic discussion of Say’s law – the theoretical argument that supply constitutes demand, have a read here.

The main point I want to raise today is that population growth is not something we respond to, as the state government so often puts it. It is something that comes about in response to economic conditions. When there is a boom – high growth. When there is a bust – low growth. Just today I sat in a seminar on the impact of war on reproductive rates of women. And yes, the supply of men also has an impact on reproductive rates and population. Imagine how well we could plan cities, towns, and infrastructure, as well as putting away areas for conservation, if we knew which factors highly influenced peoples reproductive decisions. We could plan, knowing in advance, the flow on effects from our policies. I wonder how much discussion was had before the introduction of the baby bonus? Or even discussion of the need for such direct stimulation, if indirect means can be equally effective.

So why would I raise population growth as an issue. Because for an economist environmentalist, labour supply is an important component in determining the net environmental impact of society. The more people we have, the more man/woman hours can be put to work producing goods and consuming natural resources.

The question we need to ask ourselves is what population we would like? It seems pretty radical to think about this. It brings images of China, oppression, and a violation of peoples right to reproduce. But this need not be so. While the Chinese have targeted population growth directly, if we believe that external factors influence population growth, then all we need to do is manipulate these factors to give people incentive not to reproduce. If we want more growth – just build more houses.


  1. What incentives are there for us to lower reproduction?

    You may be able to shed some light on this, but as I see it...

    1) Richer nations reproduce less. Is that because they become more materialistic, selfish and consume more. i.e. want more time to themselves without kids??

    2) Poorer nations reproduce heaps - to have enough kids to ensure your retirement??

    Getting myself a little confused following this logic through, which would indicate there's a lot more to it!

    In a rich nation population growth increases consumption... but a what does low population growth do to a poor nation?

  2. Ah, this is an interesting one. An just another example of why population is an often untouchable subject.

    There is heaps more to the story. Economists know about populations growth trends and economic development - that growth rates are slow at very low income levels, then rise with increasing wealth, then slow again (and some cases the natural population growth rate is negative).

    The first thing to clarify is that reproduction and population growth are different things. A high rate of reproduction can be accompanied by a high death rate and lead to no population growth.

    The thing that provides this first upturn in growth rate is basically a drop in mortality rates through improved sanitation, disease control, nutrition etc. The swing the other way comes about due to the high opportunity cost of children. When the labour time of the parents becomes so valuable, it becomes harder and harder to make the sacrifice between children, and the enormous amount of personal consumption you could have otherwise.

    You also make a good point that social norms change, and especially in high density cities, the choice to not have children is becoming much more acceptable.

    Your second point highlight what economists term the 'poverty trap'. Due to the need for more children to support the family, you get a reinforcing spiral - more children to support you needs more children to support them. An artificially slowed growth rate is some of these nations (eg China) may have the ability to get out of this trap, as long s governments make sure to stimulate labour productivity (the output per unit of labour time, which is aided by tools, technology, infrastructure etc). Basically, if labour productivity is improved, people will need fewer children to support them.

    However, this only works when labour productivity is improved, which means that there will be an increase in resource consumption anyway.

    The point is, that when global economies have a downturn, population growth will come down as well. It might not be pretty. In poorer nations people will continue to have children to support them, but if the death rate rises, then population growth may be negative.

    Anyway, this is a huge issue you will won't hear much about from politicians. It also links to my blog on what we produce - humans, hunger or happiness.

    And I saw the link to my blog from yours. Thanks mate. I see how I can link you chooks to mine.

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