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The Seven Billionth Baby

Oct 29, 2011 • Demand, Supply, and Markets, Developing Economies, Environment, Households, Macroeconomic Measurement, Regulation, Thinking Economically • 152 Views    No Comments

On October 12, 1999, according to the United Nations, the 6 billionth person (approximately) in the world was born. At the time, the UN projected the arrival of number 7 billion during 2013. Now though, the due date has been changed to this Monday.

With 8 and 9 billion soon to come, in 2025 and 2043, a NY Times Op Ed asks whether we will need “a bigger pie (more productive technologies) or fewer forks (slower population growth through voluntary contraception).”

As we noted in this econlife post on the 5 ways to double our food supply by 2050, don’t we first have to figure out the right incentives?

The Economic Lesson

Perhaps one of the first environmentalists, Reverend Thomas Malthus (1766-1834) told us that population grows geometrically while resource production expands arithmetically. Consequently, resource prices will rise and supply will become increasingly inadequate. Less concerned, Malthus’s friend, David Ricardo (1772-1823), said that free trade would diminish the problem.

An Economic Question: Whenever a transaction between two parties affects a third, uninvolved individual or group, economists see an “externality.” Which good (positive) and bad (negative) externalities might population growth create?

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