Friday, October 18, 2013

Reflections on What to Expect When No One's Expecting

Published in 1968, Paul Ehrlich's The Population Bomb reignited Malthusian fears about the imminent collapse of civilization due to overpopulation. Selling over two million copies, it shaped perceptions for the past half century. Despite the fact that its alarmist predictions have been falsified by history, in the popular mind the threat of overpopulation still looms.

Jonathan Last has a very different message in What to Expect When No One's Expecting: America's Coming Demographic Disaster. He dismisses The Population Bomb as "one of the most spectacularly foolish books ever written." His concern is how nations will cope with shrinking populations. Throughout the developed world and even in some of the developing world, fertility rates have fallen below replacement. Women are averaging less than two babies in Europe, the Far East, and even parts of South American. Only in Africa and in some parts of the middle east are fertility rates still high, and even many of these have fallen.

Last faces several barriers to his message. First, many people do not understand what the fertility rate measures. The media focuses on crude birth rate or population growth, not fertility rates, and even when they discuss fertility rates, they often do not use that term. The fertility rate is an estimate of the average number of children a cohort of women will bear during their reproductive years. Because some children die before they reach adulthood, the replacement level of the fertility rate is usually given as 2.1, though it will be higher in poor countries with high child mortality. If a country maintains its fertility rate at the replacement level, it will eventually, with a long lag, stabilize population and have zero population growth. That lag is the second barrier to his message.

The relationship between fertility rates and population growth is not straightforward. Many people do not understand how population can continue to grow if the fertility rate is below replacement. To answer that question requires a bit of mathematical reasoning and math is hard for most people. Ignoring immigration and emigration, population increases when the number of births exceed the number of deaths. The people dying are mostly old people. The fertility rate tells us nothing about what old people are doing; it tells us what young women are doing. In a population that has had a high fertility rate, the number of old people will be much smaller than the number of young people. If the young people start having few babies with a fertility rate below replacement, the number of births may easily exceed the number of deaths because the old generation is small relative to the population.

However, if the fertility rate stays below replacement long enough, the age structure of the population changes and the old generation becomes large relative to the young generation. When that happens, deaths may exceed births even if the young people start having lots of babies. A change in fertility rates does not have its full effects on population growth or decline immediately, but only after a long lag. There are several countries that have had low fertility rates for so long that their populations are now declining. Japan, Germany, and Russia are examples. In the not too distant future much of Europe will join their ranks.

Third, some people who understand that population expansion is not inevitable and that many parts of the world will in coming years will face a population decline maintain that the decline will be a good thing because there are too many people today. This position focuses on the level of population and is concerned with what level of population is ideal. It ignores that the rate of change in population, regardless of what the level is, has effects that may be good or bad. Last is not concerned with the issues surrounding the level of population. He is concerned only with the issues surrounding the change. He notes that a declining population creates some serious problems for a society and that we have limited experience in anticipating or dealing with those problems.

Chief among those problems is providing support for the elderly. All societies must deal with this problem in some way. In traditional societies children take care of their parents, so in these societies to be childless is a curse. In industrial societies a combination of financial markets and government transfer programs have relieved children from the task of caring for their parents but do not relieve the young from the task of supporting the old. Resources must be transferred from the young to the old, either voluntarily via financial markets or by coercion through government transfers. What we do not know is how societies will cope as the ratio of young to old decreases to levels as low as two to one. The change will affect savings and investment, innovation, and the military power a nation can project.

Last is not an expert in demography. He is a writer who is summarizing the work of others and presenting it in an easy-to-digest form for a popular audience. Demography is a story of numbers, and to enliven the book Last mixes in observations of American culture and stories. For example, Margaret Sanger was an eugenist whose goal was to stop the poor from breeding. She teamed up with a woman who had control of the fortune made by the founder of International Harvester to fund research to develop the birth control pill. The research was successful but had consequences quite different from what Sanger envisioned. The pill seems to have depressed births among the prosperous and educated more than it has depressed births among the poor and uneducated. (The extent to which the pill contributed to other changes such as increased premarital sex and cohabitation, increased age at first marriage, and a higher divorce rate remains uncertain.)

Fertility rates have fallen to levels that no one expected back when Ehrlich was renewing Malthusian fears. In Singapore, for example, the average number of babies being born is only a little more than one per young woman. The government has tried a variety of policies to raise that level, but without success. Last points out throughout his book that in the contemporary world there are no economic benefits to having children but there are substantial costs. It is therefore not surprising that so many people opt for few or no children. Last sees no reason for low fertility rates to rise, though most estimates of what the population will be in 50 or 100 years from now assume that they bounce back to replacement levels. Eventually fertility rates will rise, but only time will reveal when and why.

Thursday, October 10, 2013

Cut the meat, save the fat

Thomas Sowell describes the perverse incentives of government bureaucrats facing budget cuts much better than I can:

Back in my teaching days, many years ago, one of the things I liked to ask the class to consider was this: Imagine a government agency with only two tasks: (1) building statues of Benedict Arnold and (2) providing life-saving medications to children. If this agency's budget were cut, what would it do?
The answer, of course, is that it would cut back on the medications for children. Why? Because that would be what was most likely to get the budget cuts restored. If they cut back on building statues of Benedict Arnold, people might ask why they were building statues of Benedict Arnold in the first place.