Economic Growth & Population Growth

I have wanted to write a post for a while now about the relationship between economic growth and population growth. The gist is that at the level of the world's economy, there is not much connection between the two, and there hasn't been for ~150 years. This is non-intuitive to people for at least two reasons:

• Most people think in terms of their own country's economic growth, and not the world's. They see negative economic effects when their country's population declines. If you assert that the growth of the world's economy does not depend on population growth they will point to their own country's experience and say you're wrong. This is the fallacy of composition.
• Pro-natalists see population growth as a moral imperative, and so are averse to any argument which posits that it doesn't matter, or that it's not the principal variable which determines our future. Of course you can simultaneously believe that having more children is a moral good and that the world's economic growth does not depend solely on population growth. These are not contradictory positions to hold!

Anyway, Jason Crawford of Roots of Progress recently wrote just such a post. He included three interesting charts from Our World in Data in his post. These graphs are useful tools to frame the rest of this post, so I am copying them here.

Here's world GDP growth plotted logarithmically. As Jason notes, if the rate of change in GDP growth were constant, then a logarithmic graph ought to be a linear line. But because the rate of growth has itself been growing (i.e., the rate of change has been growing), the logarithmic graph is curved.

So what does all of this tell us? Well, one important thing that it tells us is that population growth has not been driving GDP growth for a while. We know this from the third chart: GDP per capita has been increasing at a rate greater than the population has been growing. Therefore, something other than population growth must account for at least some economic growth.

And, of course, that other thing is technology.

What, then, of concerns about population decline? Elon Musk seems to think population decline will hasten the end of civilization:

But I'm not sure it's that simple. There's the idea of artificial general intelligence (AGI). If AGI happens this century, then it's conceivable that technology will build new technology, and so fuel economic growth, even if the population declines. We can quibble here a bit, and note that Elon referenced civilizational collapse, and not economic collapse. But for most people "civilizational collapse" and "economic collapse" are equivalent concepts.

Here's venture capitalist Elad Gil writing about recent innovations in artificial intelligence:

Many core AI researchers I know at OpenAI, Google, and various startups, think true Artificial General Intelligence (AGI) is anywhere form 5 to 20 years away. This may end up like self driving cars (perpetually 5 years away until it is not), or it may happen much sooner. Either way, it seems like one of the eventual potential existential threats to humankind is the potential to compete with its digital progeny.

While doing some research for this post, I used an AI tool, Elicit, to fetch some research papers.

Think about what this portends. Elicit provides a natural language search interface combined with an AI engine, to deliver a list of papers relevant to a fairly esoteric prompt. Here's what some of its output looks like:

You can check out one of the papers here. Its abstract is worth quoting:

This paper surveys recent research on the macroeconomic implications of demographic and technological changes. Lower fertility and increasing longevity have implications on the age population structure and, therefore, on the balance between savings and investment. Jointly with meagre productivity growth, this implies a low natural rate of interest that conditions the effectiveness of monetary and fiscal policies, especially in a world of high debt. New technological changes (robots, artificial intelligence, automation) may increase productivity growth but at the risk of having disruptive effects on employment and wages. The survey highlights the main mechanism by which demographic and technological changes, considered both individually and in conjunction, affect per capita growth and other macroeconomic variables.

Here's a report from the European Parliament which makes the following claims about the possible economic effects of AI:

The majority of studies emphasise that AI will have a significant economic impact. Research launched by consulting company Accenture covering 12 developed economies, which together generate more than 05% of the world's economic output, forecasts that by 2035, AI could double annual global economic growth rates. AI will drive this growth rate in three important ways. First, it will lead to a strong increase in labour productivity (by up to 40%) due to innovative technologies enabling more efficient workforce-related time management. Secondly. AI will create a new virtual workforce--described as 'intelligent automation' in the report--capable of solving problems and self-learning. Third, the economy will also benefit from the diffusion of innovation, which will affect different sectors and create new revenue streams.

A study by PricewaterhouseCoopers (PwC) estimates that global GDP may increase by up to 14% (the equivalent of US15.7 trillion) by 2030 as a result of the accelerating development and take-up of AI. The report anticipates the next wave of digital revolution to be unleashed with the help of the data generated from the Internet of Things (IoT), which is likely to be many times greater than the data generated by the current 'Internet of People.' It will boost standardisation and consequently automation, as well as enhancing the personalisation of products and services. PwC sees two main channels through which AI will impact on the global economy. The first involves AI leading to productivity gains in the near term, based on automation of routine tasks, which is likely to affect capital-intensive sectors such as manufacturing and transport. This will include extended use of technologies such as robots and autonomous vehicles. Productivity will also improve due to businesses complementing and assisting their existing workforce with AI technologies. It will require investing in software, systems and machines based on assisted, autonomous and augmented intelligence; this would not only enable to workforce to perform its tasks better and more efficiently but would also free up time allowing it to focus on more stimulating and higher value-added activities. Automation would partially remove the need for labour input, leading to productivity gains overall.

It's important to note that none of this depends on population growth. In other words, advances in technology, specifically in artificial intelligence, will fuel future economic growth.

An important ending note: saying that economic growth does not depend on population growth, but rather on technological innovation, is not an argument for having fewer children. Concerns about population growth are a separate issue from concerns about future economic growth.