See The Future: The Power Of Understanding People’s Ages
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Where will the world be in twenty years?
Where is the world headed? I don’t have all the answers, but I want to show you how demographics can give us a clue! Demographics are the study of the structure of populations, and I find them fascinating.
I’m always looking for ‘free to use’ indicators that tell you a lot at a glance. For me, this is the best one for long term forecasts. First I’ll show you how I use them, before taking a few countries’ examples and diving into the second order impacts of different age profiles. These second order impacts should determine where we should be spending our time and money to invest in things that are helpful in the future.
Background
The total % of really old or really young people in a population determines the burden faced by the working population in providing food for all its citizens. In a world that seeks constant economic growth, having a larger population of people that are contributing to the economy is a fantastic boost. At the same time, too many old or young people can be a burden on infrastructure like schools or hospitals, without a corresponding amount of doctors, teachers or builders available.
Hans Rosling, one of the best minds at presenting complex information about development, created Gapminder — a fantastic repository of information about people globally. While he unfortunately died a couple of years ago, his Ted Talks can still be seen, and I also recommend his book Factfulness. I have relied on Gapminders information throughout this article, and thoroughly encourage you to check it out for yourself.
In this year of Lockdown and Covid-19, a disease that kills old people at a much faster rate than young people, demographics have come to the fore. Why has Africa been much less badly hit than Europe despite much more limited medical facilities?
Without knowing that much about a place, you can use graphs like the ones below to get a sense of reality there.
- The African curve in blue is a stereotypical demographic pyramid. There are many more people aged 0–10 than there are at 80–90. This indicates a steady probability of death as people get older as well as a strong birth rate.
- This contrasts with that of Europe, where the birth rate has levelled off, and better healthcare means that more people live beyond 70. The interesting thing with Europe is that there are more 30–60 year old’s than there are 0–30 year old’s. This is good for economic growth and prosperity now, but in 30 years time, there will be more 60–90 year old’s than 30–60 year old’s. This will be very tricky for care homes, hospitals and the production of food plus goods and services. Countries can remedy that by ensuring they open the doors to immigrants or imports, and by investing in their healthcare infrastructure.
- Asia is much younger, and in an economic sense will be reaching its prime in the next 0–10 years. The other thing that you can quite clearly see from the graphs above is just how many more people there are in Asia than the rest of the world (the graphs are all on the same scale).
To take it down one level, we also need to remember that when making any prediction about the world and the future: India & China are the two largest countries by a huge margin. They have a combined population of 2.8 billion people, which is the same as the next 21 biggest countries, including USA, Brazil, Indonesia, Nigeria and Russia among many others. What happens in those two countries is already changing the world at speed.
India
India recently overtook China as the largest country in the world by population. It’s birth rate has been slowing drastically, from 6 per woman in 1960 to 2.2 per woman now. India has had a population policy for a long time, but has not taken the same drastic steps as China. However, a combination of improved women’s rights and economic prosperity have been steadily driving down the rate of growth.
What does this mean for the world? India’s biggest decade of people are currently teenagers. Already the 40–60 year old cohort are running many of the biggest companies in the world e.g. Microsoft, Google (Alphabet) & IBM in the tech world. When the cohort is 200m bigger, assuming they are able to gain access to a good education, they will be unstoppable.
There is a long way to go. Covid is currently ravaging India, exposing inadequacies in infrastructure and creating Socio-political unrest. The education of their current crop of children is vital, but much of this has turned virtual which will have impacted millions of lives.
Taking a long approach, don’t bet against India. Watch the tech-space in India carefully, as what is being created there may also work globally, creating the next big businesses that run our world.
As people live longer, the strong cultural trend for multi-generational households may set a new way of being for the world. This will also likely reduce the opportunities for outsourced old age care that is seen in much of the rest of the world.
Making Predictions — UK (18–23 year olds)
If you know something about a particular age group, e.g. generally people that go to University are between 18 & 23, and if you know how many people who are currently between 13 & 18, you can use that to understand in general whether it is sensible to take a job as a lecturer, to buy a house in a university town or even to invest in an academic institution. This is especially relevant in the UK currently, as shown by the below graph:
This graph shows there are 920k 33 year olds, and only 717k 18 year olds.
The last 15 years has coincided with greater % of people going to further education, but from this year, there are ~200k less people available. This is likely to make things difficult for lower tier universities, especially if there is a drop in overseas applicants due to the pandemic.
I feel that this will not only affect universities, but also clothes shops, young adult book sales & nightclubs to take just three things from an exceptionally long list of likely second order effects.
These predictions can be surprisingly accurate due to the fact that every person is born at 0 and that there is a lot of data around death rates, even predictions of 20 years out can be fairly accurate, especially for people older than 20 years of age.
A classic demographic pyramid — Nigeria vs South Africa
Nigeria has a classic pyramid, characterised by high birth rates and consistent deaths, with less and less people surviving as they grow older. In the forecasts, that pyramid structure is set to continue until at least 2050. The main effect to watch out for is on birth rates, if they drop then the number of children will start to reduce, and the pyramid will start to square up, in the same way as for Europe.
However, for now — the main things to watch out for in Nigeria are around education, youth unemployment & emigration.
South Africa has a more mature shape. The flatter section from 30 years and below may be due to improvements in infant mortality rates, as well as the increased availability of birth control for women, leading to lower numbers of children per woman. The HIV epidemic is likely to have been a major contributor to accelerating the availability of birth control, however it is a common trend globally, for people to die later and have fewer kids as they get more prosperous.
South Africa is already struggling from unrest and high levels of youth unemployment. These will not go away, but the burden on the state is likely to continue to increase as more and more ageing people live beyond retirement age. However, if South Africa is able to improve its infrastructure fast enough, and attract jobs in both manufacturing and services through its low cost base, its young population and the fact that English is one of its native languages mean that it could boom.
I have provided a few examples of how useful demographics can be in making predictions of the future, by looking at the most basic demographic curves from India, the UK, South Africa and Nigeria. I thoroughly recommend digging through Hans Rosling’s YouTube videos, for a thrilling drive through the mega-trends in population and economics that are shaping our world.
You can read more stories on this topic and many others at my profile.
Interested in demographics? Check out my recent article on why China has an age problem
