Great post, and thank you for looking into this. I have an objection to your analysis, though as you point out, there’s a substantial chance that most economic growth in the future will be driven by artificial intelligence or digital people, so this doesn’t end up being overly consequential. But your section on the proportion of economic growth from population increases is, I think, a bit insufficiently optimistic on that factor. Economic growth rates are often theorized to be superexponential in terms of population. Increasing population contributes to growing the economy not only because the additional people directly contribute economic activity, but because marginal people also increase the growth rate. The 8,000,000,001st person isn’t just another worker or scientist, they’re another person all eight billion previous people can bounce ideas off of. One example is prehistoric Australia, which was settled by trans-oceanic explorers, settled into a stable population level in the tens of thousands for an extremely long time, and had stagnant economic and technological growth over this period. Adding another person there wouldn’t increase their growth very much, but in the population regime where the world already has ten billion people, it makes a much bigger difference.
Charlotte sort of already addresses this, but just to clarify/emphasize: the fact that prehistoric Australia, with its low population, faced long-term economic and technological (near-)stagnation doesn’t imply that adding a person to prehistoric Australia would have increased its growth rate by less than adding a person to an interconnected world of 8 billion.
The historical data on different regions’ population sizes and growth rates is entirely compatible with the view that adding a person to prehistoric Australia would have increased its growth rate by more than adding a person to the world today, as implied by a more standard growth model.
Hi Robi, thanks for your response. Are you referring to the endogenous growth models, where additional people have growth effects rather than level effects as in the semi-endogenous growth model (they increase the future growth rate)? or are you referring to historical trends? I am personally not very convinced of both.
“they’re another person all eight billion previous people can bounce ideas off of”
This seems to depend on whether people actually have more connections. Even if they have more connections AND you think that research is driven by bouncing off ideas, you might think that this positive effect is smaller than the negative effect of research duplication when the population becomes bigger. But I agree it is plausible that the relevant parameter in the semi-endogneous growth model, lambda, is greater than 1.
I’m sympathetic to Robi’s claim that growth rates may be a superexponential function of population. I suspect that the argument around people bouncing ideas off each other might be just one of the mechanisms.
I don’t want to try to articulate all of those mechanisms here, but here’s another one:
Imagine some proportion (e.g. 1%) of the population has some issue which is holding back their productivity (e.g. an illness or way of working which could be improved with a productivity app)
If the total population is small, then resolving that need may be unfeasible because the addressable market is small
However in a larger population this issue could be resolved, enabling that proportion of the population to be more productive
Great post, and thank you for looking into this. I have an objection to your analysis, though as you point out, there’s a substantial chance that most economic growth in the future will be driven by artificial intelligence or digital people, so this doesn’t end up being overly consequential. But your section on the proportion of economic growth from population increases is, I think, a bit insufficiently optimistic on that factor. Economic growth rates are often theorized to be superexponential in terms of population. Increasing population contributes to growing the economy not only because the additional people directly contribute economic activity, but because marginal people also increase the growth rate. The 8,000,000,001st person isn’t just another worker or scientist, they’re another person all eight billion previous people can bounce ideas off of. One example is prehistoric Australia, which was settled by trans-oceanic explorers, settled into a stable population level in the tens of thousands for an extremely long time, and had stagnant economic and technological growth over this period. Adding another person there wouldn’t increase their growth very much, but in the population regime where the world already has ten billion people, it makes a much bigger difference.
Charlotte sort of already addresses this, but just to clarify/emphasize: the fact that prehistoric Australia, with its low population, faced long-term economic and technological (near-)stagnation doesn’t imply that adding a person to prehistoric Australia would have increased its growth rate by less than adding a person to an interconnected world of 8 billion.
The historical data on different regions’ population sizes and growth rates is entirely compatible with the view that adding a person to prehistoric Australia would have increased its growth rate by more than adding a person to the world today, as implied by a more standard growth model.
Hi Robi, thanks for your response. Are you referring to the endogenous growth models, where additional people have growth effects rather than level effects as in the semi-endogenous growth model (they increase the future growth rate)? or are you referring to historical trends? I am personally not very convinced of both.
“they’re another person all eight billion previous people can bounce ideas off of”
This seems to depend on whether people actually have more connections. Even if they have more connections AND you think that research is driven by bouncing off ideas, you might think that this positive effect is smaller than the negative effect of research duplication when the population becomes bigger. But I agree it is plausible that the relevant parameter in the semi-endogneous growth model, lambda, is greater than 1.
I’m sympathetic to Robi’s claim that growth rates may be a superexponential function of population. I suspect that the argument around people bouncing ideas off each other might be just one of the mechanisms.
I don’t want to try to articulate all of those mechanisms here, but here’s another one:
Imagine some proportion (e.g. 1%) of the population has some issue which is holding back their productivity (e.g. an illness or way of working which could be improved with a productivity app)
If the total population is small, then resolving that need may be unfeasible because the addressable market is small
However in a larger population this issue could be resolved, enabling that proportion of the population to be more productive