Population, Land, and Movies: Another Reply to Clark

In his last response, Greg Clark poses a few more challenges.

1. “Could there be, heavens forfend, an optimal level of world population below 100 trillion? Yes.”

I addressed this very point in my original essay:

One can admittedly imagine negative externalities of population vast enough to outweigh all the positives. Just picture a world so crowded that there’s no room to move. But there’s no sign that the real world is anywhere close. Over the observed range, people and good outcomes go hand in hand—and there’s no sign of anything else on the horizon.

2. Greg correctly states my position on the labor market externalities of population:

[Caplan] objects that the fact that my extra child leads to a lower wage for your child is not an externality—it just reflects a redistribution of income. Just in the same way if I open up a coffee shop next to yours, I may reduce your income by taking some of your customers, but I have not created an externality.

He objects:

But let us not get hung up on the murky definition of what is a true externality in economics. Let us just concentrate on the factual issue. If I have another child can that lead to a decline in the net income of people, counting all sources, outside my family? The answer to that is very much yes. As long as there are fixed resources, population increase depresses income per capita below what it would otherwise be. And that depression of income is felt not just by the children of the super fecund, but by a wide share of the population.

As long as the transmission mechanism is “labor supply goes up, so wages go down,” Greg’s story remains a mixture of truism and error. Suppose a fixed supply of land is the only non-labor asset. If I have a million kids, pushing wages down by $1 per hour, each of my kids will have lower wages and very little land. As a result of my high birth rate, all other net sellers of labor will earn $1 per hour lower wages and have the same amount of land. And all other net buyers of labor will pay $1 per hour lower wages and have the same amount of land. Net effect on wages outside my family: zero. The only reason per-capita income falls is that my million kids own so little land.

If you consider this scenario further, it turns out that per-capita income outside my family will actually rise. My million land-poor kids will also bid up land rents—a net transfer from my descendents to landowners. There are naturally distributional effects: renters are worse off, land owners are better off. But the net effect of my fertility on per-capita income outside my family is clearly positive.

3. I agree with Greg when he says, “Looking across countries is not a good test of population benefits, since there will be spillovers.” But these spillovers cause us to understate the benefits of population! In a global economy, each country’s contribution to innovation depends on (a) the country’s supply of innovation, and (b) the world’s demand for innovation.

4. Greg wants to know how I would account for Iceland. The obvious answer is that Iceland is an extreme outlier. My challenge for Greg was, “Name the most credible measure of idea production that isn’t at least moderately positively correlated with population” – not “Name a single counter-example.”

Greg says that Iceland’s 318,000 inhabitants produced 70 films between 2000 and 2010. It’s great to be such an over-achiever. But what about the overall correlation between annual movie production and population? Using IMDB’s numbers for 2003’s top fifty film-producing countries, I calculate movie-population correlation of +.67. If you drop underperforming mainland China from the sample, the correlation jumps to +.88. (Raw numbers here, Microsoft Excel sheet.)

I have to reiterate my challenge for Greg: Name the most credible measure of idea production that isn’t at least moderately positively correlated with population.

5. One last question for Greg: Do you accept the terms of my bet on land prices in 2041?

Also from this issue

Lead Essay

  • Bryan Caplan argues that declining world populations aren’t such a good thing after all. While we may have dodged the “population bomb” predicted in the 1970s, the world still benefits from more suppliers — and demanders — of new goods and services. Friends of scientific and cultural advancement should want more people around. All of which leads him to a question: Are there ways to incentivize population growth without sacrificing individual liberty? Caplan suggests several methods, including open immigration, tax incentives for children — and the direct, ultimately private argument that having more kids is more fun than most people realize.

Response Essays

  • Gregory Clark argues that, while Caplan may more or less accurately describe the history of economic development, mineral and other reserves in the West have been significantly depleted. What holds true today will not hold true indefinitely regarding food, energy, and basic mineral commodities. The balance between population growth and resources only recently tipped toward abundance, and it will likely tilt in the other direction soon.

    Clark agrees, however, with Caplan’s suggestion that on the margin, middle-class families stand little to lose and much to gain by having more children; cultural assumptions in the West likely overestimate the importance of nurture, and as a result, middle-class Americans probably do overinvest in their children.

  • Matthew Connelly reviews the history of pro- and anti-natalist policies around the world. He finds them both full of coercion, perverse incentives, misogyny, and — if states try hard enough — atrocity. Population trends, however, are very stubborn, and the payoff to such policies is low. In his words, “economists do not know where babies come from.” Not, anyway, such that they can motivate people without destroying their autonomy. If libertarians are recruited to the pro-natalist side, as Caplan urges, their enlisting could come at the price of individual liberty itself.

  • Betsey Stevenson agrees that parents are often generally less happy than otherwise similarly situated nonparents. But she casts doubt on the theory that excessive parental worry is the source of the unhappiness. The most worrying parents, those who spend the most time on childcare, are also the ones who report relatively higher levels of happiness. There is, moreover, more to life than self-reported happiness, and parents may very well have other desires and values than just this one. Neither self-reported happiness nor economic utility are all that there is to our various ideas of the good life. We still need to learn more about why parents describe themselves as less happy before we can prescribe more children and less worrying as the remedy.