Population and Prosperity

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Ross Douthat writes “There’s nothing terribly unexpected in Nicholas Eberstadt’s essay on Russia’s demographic decline, but his analysis provides useful background for both the debate over birth rates and the debate over America’s Russia policy.”

Eberstadt, inter alia, claims that “history offers no examples of a society that has demonstrated sustained material advance in the face of long-term population decline.” But this is false. In pre-modern societies and in many contemporary societies there’s a clear tendency for population decline to lead to greater prosperity. See this chart from Gregory Clark:


In pre-modern Britain, the society for which we have the best data, lower population clearly leads to higher wages. Clark, in his excellent book A Farewell to Alms: A Brief Economic History of the World lays out how this works quite clearly. In a malthusian society the rate of births equals the rate of deaths and there’s stasis. If an external shock arrives and kills many people, as the Black Death did, this creates a temporary disequilibrium in which the survivors have more resources (land, primarily) to go around. They then get to raise their living standards, which leads to a period in which births exceed deaths, causing living standards to slowly decline until equilibrium is restored.

Conversely, if you have a positive shock, like the development of a custom of better sanitary practices that reduces the death rate, then births exceed deaths for a time. This requires the existing resource-base to be used in a more intensive manner and lowers quality of life until the death rate moves back up.

One way to think about this just has to do with how intensively you use land. A given piece of land can produce many more calories if you just grow grain on it than if you try to grow enough agricultural products to feed chickens. And using a piece of land to feed chickens produces more calories than using that land to feed pigs. And using land to feed pigs produces more calories than using that land to feed cows. So in a high-population society, you need to use the land very intensively and people overwhelmingly eat a diet of pure grain with tiny amounts of pork and chicken thrown in. A lower-population society can afford a higher standing of living, with a diet that includes a balance of meat and poultry and dairy products. Pre-modern Europeans had customs of delayed marriage and bad hygiene that encouraged low population levels whereas Asians had good hygiene, early marriage, and high population levels. Asians thus generally subsisted on a much lower-protein diet, lower-dairy diet and thus were both dramatically shorter than Europeans and also wildly more likely to be lactose intolerant.

Now needless to say, neither we nor Russia are currently living in a Malthusian economy. As you can see again on Clark’s graph, eventually in Britain economic growth starts proceeding rapidly enough that improving conditions lead to increased population growth and then conditions just keep on improving.

So the Malthusian logic that says that higher levels of population is a disaster no longer applies. But I’m still not at all convinced that the reverse logic that says that lower levels of population is a disaster does apply. True, lower population will lead to lower measured GDP, but the relevant issue is GDP per capita. We’ve moved away from a strictly resource-based economy, but resources are still pretty darn important. If Canada had only 30,000 inhabitants instead of 30,000,000 citizens, then it seems to me that those 30,000 Canadians could be fabulously wealthy. Conversely, if Alaska had as many inhabitants as California, then Alaskan oil revenues wouldn’t be nearly the boon that they currently are. And if the United States had 200 million citizens instead of 300 million, surely our commute times would be much shorter and patterns of residency would be more driven by where there’s demand for workers and less by where there’s affordable housing.

None of that’s to say that we should deliberately make low birthrates an objective. Indeed, to some extent I would find it ideologically convenient to support the view that high levels of population growth are desirable. I support immigration, and I support increased public support for families and children (day care, preschool, paid family leave, etc.) so I’d be glad to have that argument at my disposal. But even though I frequently see the “demographic doom” argument being made, I never see it being made by a model-wielding economist. But I’m actually quite eager to be talked out of my position on this.