The first advice to humans at the dawn of time was “Be fruitful and multiply.” (Genesis 1:28)
Our early ancestors obviously acted on that advice, knowingly or not, with 8 billion people now in the world.
How many is too many?
That question began to be pondered seriously in the 18th century by the likes of Thomas Malthus and other so-called dismal scientists, who believed that the human population grows more rapidly than the food supply until, finally, war, famines, pestilence, and other catastrophes reduce the population to manageable proportions again.
The question of “too many” took on new significance in the latter part of the 20th century, as growing concerns about the environment and the strains put upon it by an increasing population led biologist Paul Ehrlich and others to advocate for “zero population growth.”
Zero population growth would be achieved when the birth rate on average is 2.1 births per woman. (The extra “point one” is necessary because some infants born alive do not survive; without that, a population would decline.) Most industrialized nations are now below the 2.1 replacement level, and their populations are shrinking.
China represents an extreme case of concern over too many people. It enacted its astonishing one-child policy in 1979 and left it in place until 2016, resulting in serious male-favoring gender imbalances with the destabilizing societal consequences that accompanied that. No one knows how this will end.
The declining birth rates around the world reflect many complex facts about modern societies. Likewise, they have many socioeconomic implications that go beyond the boundaries of those countries caught up in this complex web. It is thus worthwhile to examine this situation in more detail.
In the early 20th century, historians such as Oswald Spengler, Arnold Toynbee, and Will Durant weighed in to put a different face on the human catastrophes that Malthus and later advocates for population control had predicted. They analyzed the rise and fall of key ancient civilizations and pointed out that a decline—not a rise—in population usually accompanied a fall.
Examples would include the following: (1) Rome, which saw a population decline from roughly a million people at its height to about 30,000 during its long-drawn-out “fall” period, which occurred between the second and sixth centuries; (2) Athens, where population estimates vary from about 200,000 to more than half a million in 431 B.C. down to between 120,000 and 180,000 in 404 B.C. when it lost the Peloponnesian War and started on a downward spiral; (3) Sparta, where the numbers of actual citizens is believed to have declined from 8,000 in 480 B.C. to about 1,500 in 371 B.C. when they were defeated by Thebes, marking the end of their dominance.
Durant made perhaps the most straightforward claim that declining birth rates were an actual cause of this kind of collapse of civilizations. He argued that the calamities that beset these societies—wars, famines, plagues, and so on—were not that different from what they had managed to navigate successfully in previous periods. He implied, however, that the low and declining birth rates made it impossible for these great civilizations to overcome the kind of challenges that they had met and successfully overcome on their way up.
The question of causal factors in these historical situations has been debated for hundreds of years, and a vast amount of literature exists on all sides of that debate. What we have seen less of is a consideration of the economic consequences of declining birth rates in the context of modern societies. This is important since population changes have a profound impact on markets at all levels, and this is frequently ignored in these discussions.
Economics texts in the early chapters have always put population prominently on the list of things that will shift the demand curve for goods and services. This goes along with income, the price of related commodities, preferences, expected prices and income, and a few others in some textbooks. The implications of a declining population are clear and unambiguous: A decline in population will shift the demand curve for any commodity to the left, thus lowering its equilibrium quantity demanded and price.
Who would want to go into a business if they thought that the demand for their product was going to decline over time? If would-be entrepreneurs haven’t considered that question, they should. That question today is more relevant than it has ever been for our economy.
Population also enters on the supply side of economic models. With a declining population, the supply of labor to the market will decline, and this will raise the price of labor inputs, such as wages. This, in turn, will cause the supply curve of the commodity produced by that labor to shift leftward, decreasing the equilibrium quantity supplied and increasing the equilibrium price. So in the end, consumers get fewer goods and services and pay more for them. Ultimately, relatively few will benefit from this situation.
Various explanations for the current decline in birth rates—down to 1.62 per woman in the United States—are being put forward by those who study these trends. These include the skyrocketing cost of raising and educating children, the difficulty in finding reliable child care for families where both parents work, changing lifestyles, and with this, the change in young people’s vision of family life or the lack of it, along with others.
Economic modeling again seems relevant to the population question as we consider these explanations. Here, we invoke the ideal market circumstance referred to as perfect competition, which is the bedrock of economic reasoning. When markets are competitive, the most economically efficient outcomes occur for all players. Certain conditions have to be met in order to have this kind of competitive market. In their strictest form, they include the requirement that market participants must have complete information about the product, at least in all critical aspects. With complete information, a consumer should have no regrets.
The main issue in the birth rate discussion is whether a person who decides to remain childless can ever make that decision with complete information. They can probably know pretty well the cost of raising and educating children, including child care. But many parents would attest that a person can never completely know what it is like to have a child until they have one. The psychic qualities of parenthood are hard to quantify.
Many would argue that there are close substitutes, such as keeping your siblings’ kids while the parents go out of town. But many parents would doubt that was even close. It is disturbing to economists to think that one of life’s most important and irrevocable decisions is made without at least fairly complete information. As the saying goes, it’s like buying a car without looking under the hood. But with the decision for parenthood, there is no way around it. It is in a class all by itself and essentially above the fray of economic thinking.
In the mid-20th century, when being childless as a choice became more possible and popular, the conclusion of many studies by psychologists suggested that by the age of 50, many childless people regretted that state. A 2022 study by Michigan State University found that only one in five people who chose to not have children did not regret their decision later in life.
Of course, for many without children, this was not a choice but rather the result of medical conditions or other life circumstances. The current discussion about childlessness often does a disservice to these people. A cat can indeed be a comforting company. The good news from a finding in another 2022 Michigan State University study is that life satisfaction for parents and people who did not have children is about the same, reflecting well on the adjustability of humans.
Another standard economic rationale for having children has been to have someone take care of you in your old age. Today, the government presumably takes over that role through the provision of Social Security. By any metrics, Social Security today cannot replace work income for Americans. The elderly who rely on Social Security struggle. According to the Social Security Administration, in 1950, there were 16 workers per beneficiary; in 1960, there were five workers per beneficiary. Recently, the ratio has been 3:1, and by 2025, it is projected that there will be just 2.3 workers “paying in” per beneficiary. The reader can fill in the blanks for the rest of this story.
However, there is a deeper issue here besides the strictly monetary one.
What does it mean “to take care of you”?
Surely, this has psychic and emotional content that goes beyond food, shelter, and material needs. Census figures show that in 1940, the average household had 3.68 persons living in it. By 2018–2022, that number had fallen to 2.57, and figures from 2020 show that 27.6 percent of all U.S.-occupied households had only one person. Being alone has become a way of life for many. I will not go into the literature on being alone and happiness, but it is immense and easily available online.
Will the conclusions drawn by Durant apply to our current civilizations, which are seeing their populations decline? Is this the ultimate “existential threat”?
A lot will depend on whether the causal factors at play in the declining birth rates around the world can be reversed and at what cost.
Cash bonuses for the birth of a child are in place in many low-birth-rate countries, such as Hungary, South Korea, Canada, Australia, and others. Still, the evidence of their effectiveness is mixed, and some experts argue that their impact is short-term and mainly affects the timing of the decision to have a child.
We should not think that ancient societies did not think of these and other strategies for increasing birth rates. Rome offered financial incentives for having children, and a female slave who produced three sons was exempted from work. But these policies did not spare its fate. Changing preferences for basic family arrangements and lifestyles is a Herculean task for any government.
Are there other side effects to falling birth rates that are yet unknown?
Do low-birth-rate countries act differently? Will they take on more characteristics of highly regimented countries such as Singapore, with a birth rate of 1.17 according to the World Bank and laws that can fine people $1,000 for chewing gum?
In households with children, people get used to chewing gum and many other bothersome things that they look back on with fond memories and smile at in old age.
