Overpopulation and Standard of Living

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Clearly, natural resources are finite. While a very sparsely populated country might have so many natural resources to spare that an increase in population would hardly be noticed, as population grows each person will only be able to use a smaller and smaller share of the resource "pie". Thus, larger populations inevitably lead to lower standard of living.

While researching the subject of overpopulation recently, I thought about this argument. It is surely overly simplistic, for of course there are many factors that go into standard of living other than population density. But still, it stands to reason that at a certain level of crowding, this factor would begin to outweigh all others. But, I wondered, just what is this level? Countries on Earth have widely differing population densities, so we should be able to get at least a rough idea of the point at which overcrowding begins to really hurt standard of living.

My research on this is easily verified. I simply looked at the population, land area, and gross national product of various nations listed in my 1995 Information Please Almanac.

I started by looking for the four most densely populated countries in the world, and the four least densely populated. These turned out to be:

Most and Least Densely Populated Countries
Country Density (people / square mile) Per Capita GNP (US Dollars)
Macao 66,666 6,900
Monaco 42,477 16,000
Malta 3,279 7,600
Bahrain 2,500 7,800
Botswana 6 2,450
Mauritania 6 555
Suriname 6 3,300
Mongolia 4 800

Hmm. Every single one of the four most densely populated countries has a higher standard of living then every single one of the least densely populated.

Well, okay, but the densely populated countries in this list are all very small. Perhaps that makes them special cases. Macao, Malta, and Monaco all consists essentially of one city with little surrounding land.

So let's look at it another way. Let's look at the four richest countries, and the four poorest countries. This gives us:

Richest and Poorest Countries
Country Density (people / square mile) Per Capita GNP (US Dollars)
Japan 857 34,000
Norway 34 23,500
Liechenstein 492 22,300
Switzerland 439 22,300
Sudan 29 180
Cameroon 71 130
Ethiopia 124 130
Eritrea 77 115

(In case you're wondering what happened to the United States, we're number 5.)

Again, surprise! Norway is a very sparsely populated country, but the other 3 richest countries are all well above the world average (94 people per square mile). The richest nation, Japan, is also one of the most crowded in the world. Of the poorest countries, only Ethiopia is above the world average. Cameroon and Eritrea are well below average, and Sudan is extremely sparse.

If we actually look at the facts, then, in practice high population density is associated with wealth, and sparse population with poverty!

This is so contrary to what you normally hear that we must ask how it could possibly be true. Is this just a statistical fluke, or is their a reason for it?

Let's go back to Economics 101. What is it that increases people's standard of living? Why do people in the developed world live so much better today than they did a hundred or a thousand years ago?

There is little debate among economists on this question. There are two simple answers: specialization and technological innovation.

Specialization is the idea that if you concentrate on doing what you're good at, let other people concentrate on what they're good at, and then share the results, everyone will be better off than if each had tried to do a little bit of everything. For example, suppose that you're very good at repairing cars, and your neighbor is very good at gardening. Meanwhile, your neighbor can't figure out how to open the hood, and you can't grow dandelions. If you and your neighbor could work out an agreement where you'd repair his car in exchange for him taking care of your garden, you would both come out ahead. Try to get more people and more skills involved and making all these trades quickly gets out of hand, so today we usually use money at each step rather than trying to arrange individual deals, but money is just a handy portable measure of skill and labor.

The more people there are, the more it is possible to specialize. This can lead to drudgery, of course, like the classic picture of the factory worker who spends his whole life screwing in the third bolt on the left hand door. But if done right it means people have more and more opportunity to spend their time doing things they enjoy and are good at, and they can leave other tasks to people who like that.

The other contributor to wealth is technological advance. Technology is applied knowledge. A better tool, a better way of doing things. Now remember those "word problems" you had in math class? Let's try one. An inventor spends 2000 hours designing a new tool. This tool is then used by 10,000 people. Each of those people saves 3 hours per year (to get the same amount of work done) because of the new tool. Question: How long would it have taken the inventor to design the tool, if 20,000 people will use it?

Obviously, the amount of time the inventor must spend has nothing to do with how many people will use his new idea.

Problem 2: Suppose that in a society of 1,000,000 people, there are 10 inventors. How many inventors would we expect to find in a society of 2,000,000 people?

The answer is surely 20. The more people there are, the more scientists and inventors we can expect. Of course there's more to it than that -- there are issues like education and communication and culture. But all else being equal, more people means more scientists and inventors, yet each scientific discovery or invention does each person at least as much good no matter how many times we multiply the population. So a high population is likely to lead to a higher level of technology, which means more wealth for everyone.

So it should not really be surprising at all that more densely populated countries also tend to be wealthy countries. Is there some point at which crowding and resource consumption would overwhelm these good effects of more people? Probably. But the evidence shows that with present technology, that point is above the population density of the most crowded countries presently on earth. And by the time our population has grown that much, surely technology will also have advanced.

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Posted 10 Sep 2000.

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