Demographics is Destiny

Demographics are not merely statistics; they are the lifeblood of societies. They shape economies, define political landscapes, mold cultural identities, and influence the sustainability of our planet.

For these reasons, all of us – not just academics and policy wonks – should pay careful attention to demographics, especially those concerned about determining where to live for the long-term.

Falling Birth Rates

In the 1960s and 1970s, there was global concern about high birth rates. Paul Ehrlich's The Population Bomb (1968) warned of dire consequences if population growth outpaced resource availability. Some even referred to it as a “population bomb.” These concerns led to policy responses such as China's One-Child Policy, implemented in 1980 to curb population growth, and global advocacy for family planning programs.

Times have changed. Today, the challenge is dropping birth rates. Many, if not all, of the major world economies have total fertility rates (TFR) below the replacement rate of approximately 2.1 per woman. Notably, it is 1.09, 1.2 and 1.78 for China, Italy and the U.S., respectively. South Korea has the lowest TFR at .72, less than 1/3 of the replacement rate. Even Africa, known for high fertility rates, is seeing its TFR fall; in 1950, it was approximately 6.5 births per woman whereas today it is 4.1. In aggregate, the global rate is 2.3 births per woman, less than 50% as compared to 75 years ago.

A variety of factors are influencing falling birth rates. For developing countries, these factors include access to education and healthcare, economic conditions, cultural norms, and family planning policies. For modern economies, factors include economic pressures, urbanization, shifting societal values, and increased participation of women in higher education and the workforce.

The concern is that few, if any, modern countries have been able to reverse the decline in birth rates, suggesting this trend may continue.

Contracting Countries

Of course, birth rates below the replacement rate lead to contracting populations. Last year, the population of Japan, for example, contracted by nearly a million people. Poland lost 130,000.

The projections are more daunting. At current rates, South Korea is expected to be half the size by end of the century. China, which has not recovered from the effects of its one-child policy, may be about 60% by 2100. Similar story for Italy and other countries in Europe.

This development may be cheered in some circles, such as among environmentalists. However, for the most part, the implications are challenging. A shrinking workforce, reduced consumer demand, weakened innovation capacity, and underutilized infrastructure, are among many dimensions of population contraction.

Changing Demographic Shape: From a Pyramid to a Rectangle

But population figures don’t tell the full story. The distribution of the population matters, too.

In the 1950s, during the Baby Boom era, the population curve looked like a pyramid. There were few older adults (people 65+) relative to school-aged children.

Today, and increasingly tomorrow, the population curve looks more like a rectangle. Lower birth rates are shrinking the base and increasing life expectancies allow more people to live 65 years and beyond.

One of the key implications of this shift from a pyramid to a rectangle is an increase in the dependency ratio. The dependency ratio is the percentage of dependents (i.e., those you and older) relative to the total working-age population. For the U.S., in 2008. the ratio dipped to its lowest point at 49.5%, reflecting demographic changes such as declining birth rates and an increasing working-age population. Today, it is 54.5%. By 2060, it is expected to rise to 85%.  

Implications for Place Planning

Population projections at the global or national are helpful in the macro, but they can miss important regional or state trends. In other words, because not all places are impacted equally, some places will be more and others less affected by these trends.

Take the U.S. At the state level, South Dakota has the highest dependency ratio of 71.3, whereas Colorado has the lowest dependency ratio of 57.1. At the county level, the variance is even more significant, with counties in rural areas and retirement destinations higher than those in urban centers and college towns.

Of course, these dynamics have enormous implications for Place Planning at the societal and individual levels. At the societal level, some places will face increased pressure on social services, healthcare, and education systems and policymakers will need to identify targeted strategies to navigate these changes. Simply, some places and leaders will navigate these changes better than others.

All of this has profound implications for the individual. If you are mid-life or younger, you will have decades to see these dynamics unfold and where you live will help determine your quality of life amidst these changes. The implications for those 65 and older may be just as significant. Living where social services and healthcare quality are at risk may pose challenges worthy of considering a change of place.

While demographics is destiny, it may also be true that geography is destiny.