Post 3 - The Aging Population
February 21, 2023 . 5 min read
A good starting point to learn about human “populations”is to revisit their constituents first: individuals like you and me.
To recap from the previous post: We humans are strikingly alike no matter where we live. Actually, get used to the following reality: you most certainly have a “twin” or “Doppelgänger” somewhere in the world! There is somebody out there who looks just like you according to scientific research working with facial recognition technology.
Nicely, we are mostly good and well-meaning towards others, capable of astonishing feats, particularly in collaboration with others. But we share biases that make us behave irrationally at times - predictably irrationally. Not to mention that evolution has conditioned us to be rather short-term oriented. And crucially – that our age is the single best predictor of our actions and behavior.
Now, if the members of a population are not always acting rationally and are rather short-term oriented, the population itself will not act rationally by default either. It will likely not be very good at solving long-term problems. It will be trapped within some of the limitations that apply to individuals.
Given that an individual’s age is key to their “everything” (desires, behavior, consumption etc.), the same will apply to the group. The average or median age of the members of a population matters a great deal to establish the group’s “everything”.
Admittedly, a population is more than just an assembly of individuals. It will manifest its own social code and Zeitgeist. It may even be gripped by the “madness of crowds”. How a society organizes and governs itself will matter as will a bunch of other characteristics, e.g. education levels and infrastructure.
But theorizing and building economic models based on rational actors will not help us understand or predict a population’s behavior. Forecasts from such models indeed have a lousy track record. Given that the age of each individual is a key factor in determining the overall needs and behavior of the population, there is only one way to get help to determine where a population may be heading over the longer-term: we have to look at other populations whose median age is similar. Or better, to look at other populations whose median age has already evolved like ours will.
This is the key case I am making and will lead to its natural conclusions with my blog. The median age of a group is the single best predictive variable for its present behavior and future trajectory. This simple realization will lead to startling conclusions and tell us which actions are sensible for us to take.
High time to look at some demographic population data. For one, the world’s population is getting older. With the exception of Sub Saharan Africa, basically the entire world is aging rapidly. The present age profile of nations is fundamentally different from what it was in the past. The American population is a case in point. It now has a median age of 38.6. A century ago, in 1920, Americans were on average 25.3 years old, and in 1820 only 16.7 years!
The “age wave” now rolling over the world is unprecedented:
Source: UN Population Prospects, 2019 update, low variant projections, own table
The Japanese population started their rapid aging first in the 1950s, with Russia a close second. China, Europe and the United States started their rapid aging in the 1970s. Most strikingly, the median age of the Chinese population has been increasing by 10 years every 25 years since 1975 and will stay on that trajectory until 2050. Africa is now joining the “age wave”, with the median age increasing going forward.
Everywhere the aging of societies has been the result of a combination of dropping fertility rates (women having fewer children) and increased longevity (folks getting older). Immigration has overall surprisingly little impact on a nation’s age profile. Immigrants are generally neither all babies nor all seniors but typically exhibit age profiles similar to that of the country they are migrating to.
The world’s aging is great news, something to celebrate. It reduces resource use, pollution and CO2 emission. But it changes everything else too. It will impact our lives greatly, in expected and unexpected ways, as we will explore in this blog.
The present aging and even shrinking of societies is an entirely new development in human history. Populations have shrunk in history but always due to famine, pandemics or war. The current “voluntary” type driven by dropping fertility and increasing longevity is new. That’s the good news.
The bad news: Evolution has not prepared us for this challenge. Accept that we won’t get it right! We are only humans after all.
So where to look for hints of what’s in store for your nation? I argue and have argued for many years that Japan is the best “guide”. Japan has been and will stay ahead in the aging process of most other countries. Japan is the Galapagos of demographic research. The country has undergone secular developments autonomously. Japan’s insularity facilitates this study as there is not a lot of “noise” complicating matters. Developments occurring in Japan earlier than in other countries trailing in their aging process may be rather conclusively attributed to demographics. Clearly, I am biased here having written books about Japan and the country’s parallels to the US. But the effort was worthwhile - you are welcome to check the forecasts from my two books.
If you are eager to learn about the demographic trajectory of your country and others of your interest, there is more here
Now that you have a basic familiarity with demographics, we turn to money in the next post. After all, it is said that money rules the world. No prediction of the future can do without getting a good understanding of what money is and how it has evolved.
 The term population is used interchangeably with group, society or nation
 You may want to start your exploration of the demographics of a chosen country here: www.populationpyramid.net. The site allows you to observe the evolution of a country’s age structure since 1950. It will also offer you a projection to 2100 (anything beyond 2050 has to be taken with a grain of salt). The data is taken from the United Nations Population Prospect database https://population.un.org/wpp/ A terrific (free!) source for any type of demographic data (births, deaths, fertility rates, migration etc.) for ANY country in the world!