Economics Letters 68 2000 309–317
www.elsevier.com locate econbase
Stabilization of human population through economic increasing returns
Duncan K. Foley
Department of Economics , Graduate Faculty, New School University, 65 Fifth Avenue, New York, NY 10003, USA
Received 6 October 1999; accepted 7 January 2000
Abstract
The assumptions of declining fertility with rising income and rising per-capita output with rising population imply the existence of a stable demographic equilibrium with a high standard of living and relatively low total
population. This Smithian equilibrium differs from the well-known Malthusian equilibrium in its comparative statics: technical progress lowers the Smithian equilibrium population, while it raises the Malthusian equilibrium
population; a fall in fertility lowers the Smithian equilibrium income, but raises the Malthusian equilibrium income. Economic data show strong support for the hypotheses of increasing economic returns to population and
declining fertility with income, and suggest that the human population of the world and per-capita output will stabilize at about 25–30 above their current size, that is, at 7 2 8.5 billion people, with a per-capital output of
6500–7500 1990 dollars.
2000 Elsevier Science S.A. All rights reserved.
Keywords : World population; Demographic equilibrium; Fertility; Smith; Malthus
JEL classification : J1; O4
1. Introduction
Our intuitive thinking about the relations between economics and demography have been largely shaped in reaction to Malthus’ 1799 vision of a demographic equilibrium in which population is
stabilized because mortality rises and fertility falls with rising household income, and household income falls with increasing population due to diminishing returns attributable to limited land and
natural resources. Though the specific elements of Malthus’ theory have been rejected as a result of the accumulation of historical evidence, no alternative equilibrium theory linking economic activity to
population has emerged as an alternative.
Tel.: 11-212-229-5717; fax: 11-212-229-5724. E-mail address
: foleydcepa.newschool.edu D.K. Foley 0165-1765 00 – see front matter
2000 Elsevier Science S.A. All rights reserved.
P I I : S 0 1 6 5 - 1 7 6 5 0 0 0 0 2 5 7 - 3
310 D
.K. Foley Economics Letters 68 2000 309 –317
The purpose of this paper is to put forward an alternative theory of demographic equilibrium based on Smith’s 1776 assumption of increasing returns to population due to a widening division of labor.
This theory implies the existence of a demographic equilibrium at which population is stabilized because fertility falls with rising household income and household income rises with increasing
population due to an increase in the social division of labor. While Malthusian equilibrium implies a low standard of living at which high mortality balances high fertility, Smithian equilibrium implies a
high standard of living at which low fertility balances low mortality, and thus projects a more cheerful view of human fate.
While the economic data necessary to calibrate these relations is scanty and not very reliable, it does give us, if we are willing to make a few heroic assumptions, a rough picture of where the
Smithian equilibrium might occur. The available data suggests that economic forces alone would stabilize world population and world per-capita output at about 25 2 30 above their 1990 levels, that
is, with a population of 7–8.5 billion people, and a per-capita output of 6500–7500 1990 inflation adjusted dollars.
2. The demographic theories of the classical political economists
