Soup and ready-made meals sales are soaring in Brazil. The reason is probably more singles. In the United Arab Emirates, if you are over 30 and female, there is a 60% chance you are unmarried. For Japan, 31.5% of all households are one-person.
Looking at Japan, we would see a contracting population but more households. The reason is a growing singles population that has a distinct economic impact. A person in an affluent nation who moves into a new apartment needs consumer durables (goods lasting 3 years or more) that include a refrigerator, furniture, a TV, maybe a washing machine. Single people tend to live in apartments rather than houses.
There are some universal causes of single living. People are getting married later, there is more divorce, we are living longer and marriage is no longer as attractive. In China and India, male baby selection results in too many bachelors looking for wives.
Where are we? While single person households are increasing around the world, we should be wary of generalizing. We can remember, though, that when more people live alone (please see graph below), it is a major demographic shift that affects demand for certain consumer goods and services.
This Economist article provides an excellent overview of the trend toward living alone around the world and was the source of my graph. It also led me to a Euromonitor report on Japan’s singles. For unmarried mothers specifically, this NY Times Magazine article was interesting because of its focus on 2 families and also provided a sound statistical base.
Econlife Living Solo: Part 1 is here.
Posted by: adminEcon
Tags: aging, Brazil, consumers, demand, demographics, divorce, durable goods, households, Japan, living alone, marriage, single women, United Arab Emirates, US
Just remember 4-2-1-whenever you think of Chinese demographics.
4 refers to 2 grandmas and 2 grandpas, 2 is their adult children and 1 is the next generation.
The social fabric of China is shifting. In rural areas, the elderly population is growing as the young leave their parents and move to the cities. For those in urban areas, families are smaller, many with one child. With families separated, their traditional caring network is uprooted.
What does all of this mean? A family centered culture will have fewer children with siblings. In the home, a nation with an inadequate old age pension system will have fewer adult children to care for the aged. Meanwhile, at work, there will be relatively fewer people in the labor force supporting a larger old age cohort.
Our Bottom Line: China is one of many nations that will have to cope with the economic implications of an aging population. As of 2011, neither China nor the U.S. was among the world’s 10 “oldest” countries with relatively large populations of people age 60+. At the top of the list is Japan (31%) and then Italy (27%) and Germany (26%). Greece is #7 (25%), and Portugal #8 (24%).
However, China is among a list of countries whose over 60 population will increase by the greatest percent. Between 2011 and 2050, Harvard researchers say that China’s aging population will rise 21% and represent 34% of their population by 2050.
And that returns us to 4-2-1.
I especially recommend this new World Bank report for up-to-date information on China’s aging population. Also, my facts about Chinese demographics came from a Working Paper from Harvard, The Economist, here, the New England Journal of Medicine, here, and the Population Reference Bureau (PRB), here.
The beginning of life and the end of life are becoming more expensive.
- The number of premature babies in the U.S. has soared by 36% during the past 25 years. Caused partially by twins, triplets, (and more) from older mothers and by advances in “assisted reproduction,” extremely premature babies born at 28 weeks and sooner need months and sometimes a lifetime of sophisticated medical technology. However, effective neonatal care can also prevent a lifetime of illness. (Here is an excellent New Yorker Magazine article about neonatal science.)
- By 2050, close to 27% of the U.S. population will probably be older than 65 and the median age will be 41. Older than we are, Europe and Japan will have a median age that is close to 50 in 2050. Looking at diminished productivity and escalating health care, end of life cost can be high.
The Economic Lesson
Remembering that scarce resources require tradeoffs, how should we cope with the beginning and the end of life becoming more costly?
The health care expense of pre-term babies, at $18 billion, is estimated to be half the total spent on newborn care. Here, a Peterson Institute report cites health care for aging populations as a major source of governments’ budget pressures.
With economic cost defined as sacrifice, beyond finance, the cost of preserving life for the very young and the very old becomes even more expensive.
An Economic Question: Knowing that all societies can allocate a limited supply of land, labor, and capital to health care, what tradeoffs would you support?
1. Among the U.N.’s 8 millennium goals for 2015, sustaining aging populations was not included. Why?
2. You might want to decide with whom you agree: WSJ‘s Daniel Henninger saying that “Capitalism Saved the Miners” or The Huffington Post with “Capitalism Would Have Killed the Chilean Miners“.
3. Perhaps like people, some dogs are pessimists and others are optimists according to a recent study described in Current Biology. You can see the economic connection here.
Posted by: adminEcon
Tags: aging, Chile, dogs
Baseball’s MVPs are typically younger than 30 and rarely over 35. Office workers and salespeople tend to be most productive in their early to mid-40s. Most Nobel prize winners in physics and chemistry did their innovative work before they were 50. Academic studies even imply that businesses with younger workers have a higher return on their assets.
In an excellent course on “Modern Economic Issues” from the Teaching Company, when Dr. Robert Whaples discusses aging in Lecture 13, he suggests that we have more to worry about than soaring health care spending and Social Security programs. An aging population could diminish productivity and innovation.
By 2050, close to 27% of the U.S. population will probably be older than 65 and the median age will be 41. Older than we are, Europe and Japan will have a median age that is close to 50 in 2050.
Should we be concerned? One researcher suggests that we might “coax more output from the workers we already have, through more physical capital, improved technology, or better resource management.”
The Economic Lesson
All of this returns us to economic growth. To sustain and better our standard of living, we need economic growth. Our yardstick for measuring economic growth is the Gross Domestic Product (GDP). The GDP is equal to the value of the goods and services that we produce in the U.S. each year. Its four components are 1) gross investment (primarily business spending), 2) consumer spending, 3) government spending, 4) exports minus imports.