The media was alive last week with a new forecast of global population. This may not sound exciting but there have only been two sets of accepted forecasts to date. The UN Population Division (UNPD) has been forecasting every five years since the 1950’s. The other main source has been the Wittgenstein Institute in Austria. The new study is by the Institute for Health Metrics and Evaluation at the University of Washington . It showed surprisingly different results, accelerating many of the trends I have been studying.
The good news is that compared to the UN, the new study shows the World Population peaking at 9.73BN in 2064. It then declines thereafter. (The UN forecasts a continued population growth to the turn of the century, peaking then at 10.9Bn). They forecast it will be down to 8.79BN by the turn of the century. Within that they show very different country level data. They forecast that within 25 years 77% of the countries in the world will have fertility rates too low to maintain their population. 23 countries will decline in population by more than a half by the turn of the century. These include Japan, Thailand and Spain. The Chinese population is forecast to decline by 48% between 2017 to 2100 (see Newsletter #006). This means more declining markets and in some cases markets collapsing.
They are more aggressive on the ageing of the remaining population. They forecast that by 2100 there will be 2.37BN individuals over 65 and only 1.7BN below twenty (see Newsletter #011). Markets are becoming older faster than previous forecasts suggested. The market power of the Third Agers will increase faster and further.
These very different numbers come from the way that they did the forecast. The UN uses a model based only on the extrapolation of existing fertility trends. The new study by comparison forecasts fertility based on two independent factors. They use “education of women” and the “availability of modern contraceptive devices”. Together these two variables can account for 80% of the variation in fertility by country. Importantly they can be influenced by national and international policies. The current Strategic Development Goals of the UN include female education and contraception targets. According to the authors, if the world were to meet these targets the global population is already peaking.
The major differences in the output of the forecast is in two areas. The population forecasts for sub-Saharan Africa, the Indian sub-continent and Indonesia are much lower. In fact they are forecasting 702m less people in sub-Saharan Africa alone by the turn of the century. They are predicting an accelerating decline in fertility in these high fertility areas.
The more interesting debate is the fertility rate when it goes below 2.1, the replacement level. Will it continue to fall or will it plateau or even increase? Both the UN and Wittgenstein assume that fertility will “bounce back” to a level around 1.75 per female. The 2021 forecast fertility level in Taiwan is the lowest in the world at only 1.07 children per female. Assuming a 1.75 level implies an increase in Taiwanese fertility. A 0.1 increase in global fertility translates into an extra 528m people on the planet by the turn of the century.
Forecasting these sub-replacement level fertility levels based on trends has proved difficult. As women have more control over the number of children they have, one of the first trends is to delay child bearing. This depresses the fertility statistics but represents only a deferral. Extrapolating the trend would be wrong. All the evidence suggests however that the later in life a woman has her first child, the fewer children she will have. The trend can therefore decline because of the deferral, rise and then decline again.
How Many Children Shall We Have?
The economic theorists suggest that a rational parent will assess the costs and benefits of an extra child. Children in agricultural regions are often part of the workforce. In a world with no pensions and care for the elderly, your children are also your insurance against old age poverty and loneliness.
The post Second World War growth in state provided pensions reduces the value of a child in your old age. At the same time, the direct and opportunity costs of having a child have increased. Children need to be educated more to ensure their employability. This increases the time before they can make an economic contribution to the family.
The Chinese Government has recently legislated against the “for profit tutoring industry”. One reason is to boost fertility. In their highly competitive school system, an educational “arms race” has developed. Parents investing more and more into the education of their children. (In South Korea parents are spending 10% of the income on tutoring for each child). They are choosing to have less children but to give each child the best possible opportunity.
The growing participation of women in the workforce raises the opportunity cost higher. In many European countries two income families have become the norm. The result is that property prices have risen. This locks women into the workforce and increases the “opportunity cost” of an extra child.
These economic arguments are reinforced by cultural shifts around the world. With prosperity comes the aspiration to become consumers. With prosperity, food and shelter becomes a smaller proportion of income. Individuals increase their aspirations to buy goods and services. In many parts of Europe, the “one child” family is becoming the norm. This model of “family life” and being service consumers is being spread around the world by the media. It is affecting cultural norms and hence fertility everywhere.
Fertility Decline is Accelerating
The rate of decline in fertility is accelerating around the world. In the UK it took ninety-five years for the birth-rate to fall from six to three children per female. From six in 1815 the birth-rate fell to three by 1910. Since then global prosperity increases have been faster. Those increases feed into medicine and nutrition, reducing child mortality faster. Less child mortality means lower fertility. Education of women has improved across the world. This has increased the opportunity cost of children. The use of modern contraception continues to grow. The result is that with each passing decade the time to drop to three children per female has shrunk. By 1986 when the birth-rate in Iran was six, it could fall to three in only ten years.