Fact Check: Is population growth a path to prosperity?
Governments, economists and others, can be confident that population growth is the simplest path to ensuring economic growth is maintained. Since GDP is total spend by all people, increasing the people is almost certain to increase GDP. But does population growth necessarily benefit the everyone at a per person level? Or just those who, like the government, collect wealth from everyone, so more people to contribute to their wealth means their wealth rises?
Looking at counties around the world, it becomes clear that while, governments, large nationals and multinationals, and billionaires benefit from a larger population, most individuals, if anything, are worse off in terms of individual wealth and happiness. More people in a finite country with finite resources, means, on average, a smaller share of resources per person.
Up until the start of the 20th century, it seemed that resources were unlimited, which meant as population grew, more resources were always discovered and resources per person could still rise. However, in the 21st century, there are now less new resources to find, virtually no new land resources for expansion, and looking at what happens on a country-by-country basis, things have changed and now countries that are NOT growing their population or managing a large population are providing greater wealth and happiness per person.
Why do the rich and powerful argue for population growth?
GDP per Capita: What Matters To the Average Person.
For the average citizen, living standards are determined by GDP per capita, not total GDP. India having a total GDP of over 3 trillion US$ is less impressive once it is divided by over 1.4 billion people.
This means for the average citizen, economic growth is only a good thing, only if it also delivers per capita, economic growth. Economic growth through population growth always ensures total GPD rises, but often can mean per capita GDP falls. Generally, if a country has insufficient people to access all resources, such as in the USA prior to the 20th century, population growth will raise both total and per capita GDP. However, once adding more people no longer increases accessible resources, as with 21st century USA, having more people means a smaller share of resources per person. From that point, only those rich enough to growth their slice even as population grows, see an inherent benefit from population growth.
Who Is Motivated Primarily By Total GDP?
Companies with national, multi-national, or global markets.
Unlike individuals, national and global organisations that can expect to maintain market share as population grows, are mainly impacted only by total GDP, and have little preference for individual wealth levels to increase, or even be maintained, over total wealth levels rising as a result of population growth. Even if these organisations earn less wealth per individual, if there are sufficient extra individuals to earn from, then they can still earn more in total. Individual wealth is unimportant to these organisations, as their income is a fraction of the total of all wealth, so GDP per capita is unimportant.
High Wealth Individuals.
These are often the owners, of shareholders of the companies described above. Once an individual has sufficient investment in such companies, their financial fortunes become aligned with those companies.
Politicians.
Politicians do not get to keep the tax revenue themselves, but the greater the tax revenue, the more valuable the assets they have control over, so the greater their sense of power.
Yet tax revenue depends not on wealth per capita, just total wealth so there is no difference between people getting richer, and just having more people. Only total wealth matters. As an example, the government in Australia, the developed nation with the highest ratio of population growth in the G20, was questioned about a ‘per capita recession‘, where living standards decline, but the economy grows through population growth, the government stated only the overall result mattered, thus implying wealth per individual did not matter.
In 2019, the Prime minister of Australia declared that a per capita recession was not an economic term worthy of recognition. Effectively declaring that the per capita GDP was unimportant, with total GDP being the only statistic that was important, at least to him.
This is effectively declaring that, to that government, individual wealth is not significant. Government economic success is most often measured by economic indicators that reflect the situation for big business, and the small percentage of very wealthily individuals who own those big businesses. That ‘per capita recession’ is a made up term is true, but are not all economic terms made up?
This topic is covered in more detail in ‘Economic Growth: Holy Grail?‘.
Economists.
Most economists are commissioned by governments or large companies, and thus often view economies in terms of economic activity, and the performance of only the largest companies. Note that only the largest companies are included in stock market indexes.
The end result is the economists usually only consider total GDP, rather then per capita GDP.
But then, there is the famous quote:
“Anyone who believes in indefinite growth in anything physical, on a physically finite planet, is either mad or an economist.”
Attributed to Kenneth Boulding in: United States. Congress. House (1973)
Summary.
In summary, governments and economists may argue for increased population as it will grow the overall economy, even if at the expense of average individual wealth, because they are rewarded for delivering total economic growth. Total economic growth is all that is required to provide positive economic indicators, and to keep those most likely to provide substantial political funding happy.
Economy Vs Population.
Is a larger population good for the economy?
Answer: yes depending on what is meant by ‘the economy’, but again potentially bad for each citizen.
The economy is often measured by total GDP, and as pointed out by the Australian prime minister, the wealth of typical individual citizens is not part that equation.
All else being equal, a larger population will mean a larger total economy. Most likely less wealth per person on average, but typically more wealth for the leaders and the richest members of society.
Looking at counties ranked by GDP, it is clear that it is not in the same order as a list of countries by population, which means that answer is: certainly not always.
This is because GDP per capita changes significantly between countries. Simplistically, the total economy is:
Total GDP = GDP per capita x total population
Clearly, if population increases without changing GDP per capita, then total GDP will increase. In reality, changing the population size will change, and typically decrease, GDP per capita. Total GDP is more complex than the simplistic formulae, and includes factors like ‘accessible natural resources‘. For example if farming is part of economy, adding more people will not proportionally add more farm land, unless that country still has unused land of the same quality as existing farm land. In the end, it can be difficult to add more people and retain the GDP per capita ratio, but every additional worker added, should result in some rise in total GDP.
So, moving a country to a larger total population should increase GDP of that country, even if the larger population lowers GDP per capita and reduces living standards. To use the image above as a metaphor, there should be some more additional money raining down, but there will be more people to get a share of that money, so the ratio of money to people would normally mean less money each.
Is population growth good for the economy?
Answer: yes, size of the total economy, but: NO, economic outlook, a GDP per capita or prosperity.
Statistics show population growth through by higher birthrates correlates with low individual prosperity.
Perversely, it can be said that the total economy benefits for the high population that results from high birthrates and high population growth, even though individually, citizens are less prosperous.
For example, Nigeria, one of countries on the high birth rate list below, has a total GDP of US$504 billion, while Singapore, from the lowest birth rate list below, has a smaller total GDP of US$423 billion. The high birth-rate and resulting high population do help Nigeria rank above Singapore on total GDP, despite per capita GDP of Singapore being almost US$80,000 per person, while Nigeria has a per capita GDP of less than US$2,500 per person per year.
If you are the head of government, a larger total economy means a larger budget. A smaller budget per individual, but still a larger total expenditure. Some national businesses can also earn more simply because of the larger economy of for example, Nigeria over Singapore. This is in stark contrast to the situation of individuals and the average person will see the economy of Singapore as preferable.
In summary, the more people, the greater the total wealth, but unless the extra people enable accessing additional natural resources, the normal result is the less wealth per person, as the natural resources per person decreases.
All statistics show that a high birth-rate correlates with lower economic wealth per person.
Individual Wealth vs Population: Individual wealth is not the economy.
Interests of highly wealthy are not always aligned with the Average Person.
The wealthy gain wealth by receiving part of the wealth of percentage of the population. The result is that the greater the population, the greater the wealth of the wealthiest people. As the very wealthy gain their wealth through “trickle up economics”, earning small amounts of wealth from each person they can “tax” or sell things to, the more people the greater their wealth. However, unlike rulers or the very wealthy, most from do not automatically earn more as population increases.
Does Population Growth Correlate with prosperity? No!
I am unsure exactly how countries such as Niger, Somalia and the Democratic Republic of Congo benefit from their exceptionally high birth-rates, but it does not seem to be through GDP per capita.
In fact, the average GDP per capita for the 10 countries with the lowest birth-rates, at $846 per annum, does not compare well with the 50x higher average for the 10 countries with the lowest birth-rates, at $50,578 per annum.
| Lowest pop growth | Korea, Rep | Hong Kong | Puerto Rico | Singapore | Malta | Ukraine | Spain | Italy | Bosnia | Macau | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| birth rate | .8 | .9 | .9 | 1.1 | 1.1 | 1.2 | 1.2 | 1.2 | 1.2 | 1.2 | |
| GDP/Cap | 34,994 | 49,850 | 37,823 | 79,576 | 33,094 | 4,828 | 30,157 | 34,777 | 7,078 | 50,578 | 1 |
| highest pop growth | Niger | Somalia | Congo | Mali | Chad | Angola | Nigeria | Burundi | Gambia | Burkina Faso | |
| birth rate | 6.6 | 5.9 | 5.7 | 5.7 | 5.6 | 5.4 | 5.2 | 5.2 | 5.1 | 5.0 | |
| GDP/Cap | 599 | 544 | 3,243 | 897 | 743 | 3793 | 2356 | 272 | 844 | 846 | 1 |
It is not that all low birth rate countries are crisis free either. The statistics for low birth rate countries include Bosnia, and Ukraine in 2022, where low birth rates may artificial, but still, even with these low performing countries included in the statistics for completeness, the result is still that low birth-rate countries outperform high birth rate countries. Also, overall, the economic outcomes of countries with birth rates below the midpoint of the international average birth-rate, is better than those with birth rates above the midpoint.
The wealth of the extreme wealthy people in society wealthy does seem inextricably linked to population size, but this can be limited to the wealth of one or two people and is in contrast with the wealth of the overall population. The pharaohs of Ancient Egypt could never had enjoyed such wealth without a substantial population to generate that wealth. This is a significant, complex and interesting topic.
Ok, so if the growth itself is not so desirable, then perhaps the end result of growth, a larger population, is what is desired?
Does A Large Population Correlate With individual prosperity? No!
Nor does a large population correlate well with per capita wealth. Of the worlds most populous countries, the USA is a standout being the 3rd most populous, and just missing the top 10 richest per capita at 11th, but next from the top 10 most populous is Russia, at 79th in that list.
While a low birth-rate is not a perfect correlation with a high living standard, there is clearly a strong link. The birth-rate projected for China brings China inline with many richer nations.
Happiness and Population: A case for limiting population.
Happiness vs Population: Low population growth correlates to happiness.
If you look at the worlds happiest countries 2021, every country on the list has a population pyramid with straight sides.
| 2021 | Country | Births per woman | Population | 2022 |
|---|---|---|---|---|
| 1 | Finland | 1.4 | 5,550,066 | 1 |
| 2 | Denmark | 1.8 | 5,883,562 | 2 |
| 3 | Switzerland | 1.6 | 8,753,933 | 4 |
| 4 | Iceland | 1.7 | 377,280 | 3 |
| 5 | Netherlands | 1.7 | 17,718,840 | 5 |
| 6 | Norway | 1.7 | 5,435,536 | 8 |
| 7 | Sweden | 1.8 | 10,402,070 | 7 |
| 8 | Luxemburg | 1.4 | 645,397 | 6 |
| 9 | New Zealand | 1.8 | 5,133,225 | 10 |
| 10 | Austria | 1.6 | 9,027,999 | 11 |
| 11 | Australia | 1.8 | 25,922,619 | 12 |
| 12 | Israel | 2.9 | 9,549,50 | 9 |
| 13 | Germany | 1.6 | 83,695,430 | 14 |
| 14 | Canada | 1.5 | 38,835,092 | 15 |
| 15 | Ireland | 1.8 | 5,123,536 | 13 |
| 16 | Costa Rica | 1.7 | 5,163,038 | - |
| 17 | United Kingdom | 1.7 | 67,081,234 | |
| 18 | Czech Republic | 1.7 | 10,516,708 | 18 |
| 19 | United States | 1.8 | 332,911,453 | 16 |
| 20 | Belgium | 1.7 | 11,657,619 | 19 |
| - | France | 1.8 | 67,874,000 | 20 |
Consider the data for #1 country, Finland, in comparison with a country with high birth rates that did not make the top 20 list, Niger.
No country in the top 20 has a lower birth rate than the happiest country, Finland.
Every country on the top 10 happiest counties list, has a population pyramid that looks somewhat similar to that of Finland.
Further, only 1 country of the 20 happiest countries, Israel, has a fertility or birth rate of over 2.0, and the average for the 20 countries is 1.735, which is well below the world average of 2.4. Every country in the top 20 happiest countries, with only the one exception, has a birth-rate for a declining population. Further, the top 5 have a slightly lower average than the next 5, and the top 10 a lower average than the next 10, even if Israel is eliminated from the second 10 as an outlier.
It is impossible to know if there is any causation, but there certainly is correlation. None of this proves that either low birth rates produce happiness, or that happy people have less children, but it certainly does show that low birth rates and happiness for whatever reason do go hand in hand.
In fact while all happy countries have low birth rates, there are also countries not on the happy list with very low birth rates, such as South Korea and Japan. Still countries that are quite happy, but showing that the lowest birth rate will not make a country top the list for happiness, although it does seem to be extremely hard to make the list without a low birth-rate.
Happiness and population size: A Smaller population correlates with happiness.
Again, looking at the worlds happiest countries 2021, 9 of the top 10, have a population of less than 10 million, yet around half of the countries in the world have population of over 10 million (90 of 188 at the time of posting).
Interestingly, each of Australia at #12, Germany at #13 and the USA at #19, all have only countries with a smally population above them on the list. Notably, the the USA, despite being #19 on this list does appear to be doing extremely well for a country of over 300 million, with the nearest rival for most populous on the list, Germany, having only a quarter of the population.
There is no suggestion that the only path to a happy country is a small population, although it does seem that a population under 10 million increases the chances of being a happy country.
The main point is that there is definitely no case for arguing that a large population is going to make everyone happier, despite having a larger population being a very common goal for governments.
Yes, a large population probably increases the wages of politicians, and make increase profits for large organisations that have the most to donate to political parties, but it is not going to make the country overall happier. If anything, it seems more likely to make people less happy.
Happiest countries update.
In 2022 a new list of happiest countries was published, with mostly small changes, including the two smallest countries on the list, Iceland overtaking Switzerland for #3and Luxemburg moving up to two places to #6, plus Israel moving into the top 10, and the USA jumping 3 places to #16. However, nothing really changes the overall trend of domination at the top by countries below 10 million population.
Happiness is not just about wealth anyway.
Happiness is not only just about wealth. However, the latest research is that wealth does play a role, relationships with others can play a bigger role, and while wealth up to a certain point is beneficial, studies suggest wealth beyond that point has little benefit, and in any event, the wealth most acts as wealth multiplier, meaning that the happier you are even without the wealth, the more the wealth can help in becoming even happier.
The next finding is that the effect of wealth on happiness is all relative to peers, which in the end means the happiest society will be the one with very high levels of wealth equality.
In fact, the greatest happiness often comes from win-wins, which don’t even exist in zero-sum games.
For societies to achieve success, game theory reveals that given overall success is life is not from zero-sum games, but from opportunities for win-wins, which benefit most from the ability to resolve conflict.
Beyond the level of population where everyone can enjoy maximum wealth, which for almost every country on the planet was passed during the 20th century, further population growth becomes increasingly becomes a zero-sum of winners and losers.
Farming Humans: Who wants more people?
All who collect a form of ‘tax’ from a percentage of the population.
As explored in “Trickle Up Economics: How the Wealthy Get Wealthy“, governments, Billionaires, Multinationals and even national organisations almost always earn their significant wealth by ‘taxing’ or earning some revenue from a significant percentage of the population.
The larger the population, the larger their revenue, so they desire the largest population possible. Consider Apple, they have around 20% of the global market in mobile phones, which means 1 in 5 extra people is an extra customer.
Governments & their leaders.
Governments have debts to pay, and often pension schemes to fund. The greater the population growth, the faster every past debt or commitment becomes smaller relative today. Plus, governments have one leader, the pay of that leader is funded by the entire population so the more people the more pay and more senior the position, plus the size of the budget and international importance is determined by total wealth, not average wealth.
Dictators and would be emperors.
Dictators and powerful leaders can’t always wait for ‘organic’ population growth, opting instead for instant population growth by annexing new areas such as Crimea or perhaps Taiwan.
Multinationals: Who doesn’t want more customers?
What global company does not want more custoemrs?
Just as a chicken farmer earns more revenue if he can increase the population of his farm, those that earn revenue from the overall population, can earn more if their human ‘farm’ has a greater population. For each of these groups, either the people of a nation, or some segment of the global population, is ‘the farm’. At some point as populations rise, living standards may be compromised.
Billionaires with global commercial empires.
Jeff Bezos gave a heartfelt thanks to Amazon employees and customers following his record-setting trip to space Tuesday — noting that they “paid for all of this.”
“I … want to thank every Amazon employee, and every Amazon customer because you guys paid for all this,” the 57-year-old Amazon founder told reporters after returning from his trip to the edge of space.
“So seriously, for every Amazon customer out there, and every Amazon employee, thank you from the bottom of my heart, very much. It’s very appreciated.”
Jeff Bezos thanks Amazon workers, customers for bankrolling trip to space
In reality, if the work could be done without them, having less workers Amazon would increase Jeff’s wealth, but his wealth is in proportion to the size of the customer base. If the world still had the same population as it had one hundred years ago in 1921, Jeff Bezos would only have 1/4 of the wealth he has. Unlike the average person, Jeff Bezos is not impacted by increased competitions for housing and other resources as population grows.
Unfortunately, that fact that wealth trickles up, does not mean that the wealthy are necessarily motivated to raise the wealth level of the masses.
It may seem logical that the more wealth the population contributing has, then the more wealth there is available to earned by the wealthy, which would deliver ‘trickly up economics’ and give the wealthy economic incentive to try to improve overall wealth. The idea that masses gaining wealth is in the interests of the wealthy, since the wealthy derive their wealth from the masses. But then consider that the Sultan of Brunei and Carlos Slim of Mexico are some of the riches people in the world and their fortunes appear to be mostly aggregated from ‘masses’ who live very far away. The less wealth the people nearby, the greater the power of the wealthy, so when wealth does not arise from ‘the local market’, as is increasingly the case, any concept of ‘trickle up wealth’ breaks down. Then there is the fact that by increasing the wealth of the ‘masses’, inherently the ratio of ‘typical wealth’ to that a given wealthy person, and thus how wealthy they are perceived to be, decreases.
Conclusion.
The overall level of wealth, and happiness, per person starts to decline, as population increases further and further beyond the threshold where there are sufficient people to fully access available natural resources. Effectively, this is the point at which their part of the planet becomes noticeably finite, and is the optimum population.
However, a small elite, including billionaires and often politicians, may see their ‘share’ increase, even when the average share decreases, no such constraints need apply. If you are rich enough, or powerful enough, the more people there are, the richer you can be, as long as the share of the world left for those not so rich keeps getting smaller.
Related topics:
Updates.
- 2022 July 22: Add ‘Fact check‘, Expanded Population and Happiness to a full section, linked 2022 happiness list.
- 2021 May 5: Added happiness data, in a subsection.
Future updates:
- Shorten extract by making clear link to who benefits.