Wednesday, September 23, 2009

The More the Merrier: Population Growth Promotes Innovation

Copyright, The New York Times Company
A recent study reiterated the conclusion that population growth ought to be controlled in order to combat global warming, and other world problems. I beg to differ. The authors of studies like these have exaggerated the benefits of population control, because they ignore some of the significant economic benefits of large populations.

The director-general of Unicef has been quoted as saying, “Family planning could bring more benefits to more people at less cost than any other single technology now available to the human race.” And one of the benefits of reduced population, it is claimed, is reduced carbon emissions and therefore mitigation of climate change.
This statement takes technology for granted, yet technology itself depends on population.

Especially important among the sources of technical progress — discoveries — are trial and error, and incentives. Reasonable people can disagree about the relative importance of these two, but both are stimulated by population.

The more people on earth, the greater the chance that one of them has an idea of how to improve alternative energies, or to mitigate the climate effects of carbon emissions. It takes only one person to have an idea that can benefit many.

Plus, the more people on earth, the larger are the markets for new innovations.

Thus, even if the brilliant innovators would be born regardless of population control, their incentives to devote effort toward finding new discoveries and bringing them to the marketplace depend on the size of that marketplace. And it’s clear that incentives matter for innovative activity: That’s why we have a patent system that helps innovators obtain financial rewards for their inventions. Not surprisingly, research has shown that market size stimulates innovative activity, as in the case of pharmaceutical research that is especially intense for conditions that have more victims.

It may take a long time for population growth to either give birth to an inventor brilliant enough, or motivate enough incentives, to have an impact on the climate. But that’s not a reason to turn to population control, because it also takes a long time for population control’s impact to be noticeable.

Although the calculations are inherently uncertain, the value of the additional innovation stimulated by additional population may be significant. In my academic work I have calculated that the value, to the entire marketplace through this channel, of an additional person may be on the same order of magnitude of the value that person places on his own life.

For example, a person who can earn $2 million in his own lifetime may, by his presence in the worldwide marketplace, stimulate innovative activity that is worth a few hundred thousand dollars.

The role of technical change has been repeatedly underestimated. For example, someone a century ago who claimed that the earth could have enough food to support nine billion people (population control advocates now think that the earth’s population can easily get there) would have been considered crazy. But with today’s technology it is easy to see how many billions can be fed. Some of the important solutions to climate change will also come from technological progress.


Michael said...

Someone at The Economist and Brad Delong have interpreted this post as saying that "we shouldn't improve education and access to contraception in developing nations", and "that women should continue to struggle to limit family size, leaving developing nations with large populations of poor, uneducated youths, unable to do much in the way of skilled work".

Can you clarify whether you hold those views?

Eric said...

What's that Adam Smith said? Something about the extent of the market determining the degree of cooperation and specialization? (I'm really asking the question, not just being snarky) Don't the poor of the world deserve a chance to participate in that market and determine its extent?

Case closed for me. The idea that "educated" members of developed economies feel like swooping down and blessing the great unwashed with pills and potions to prevent them creating more of the great unwashed is a supreme irony. The poor of the world deserve a chance not only to survive, but to thrive. The developed world may be the chief impediment to their doing so, with its tariffs and quotas and caps and trades and ideas about procreation.

Your site is a great resource, Casey. Keep up the good work!