# Why Are Birthrates Plummeting Worldwide?

An episode of [Patrick Boyle On Finance](https://invisiblenetwork.ai/podcast/1547740313), 25 Mar 2025, 25 min.

Audio: https://traffic.megaphone.fm/APO4514086203.mp3

Birth rates are plummeting worldwide – and while this might seem like nothing new – as it has been the case in developed countries for quite some time. The thing that is interesting is that we are seeing declining birth rates everywhere and the standard explanations that you have heard in the past don’t really hold up.Patrick's Books:Statistics For The Trading Floor: https://amzn.to/3eerLA0Derivatives For The Trading Floor: https://amzn.to/3cjsyPFCorporate Finance: https://amzn.to/3fn3rvC Ways To Support The Channel:Patreon: https://www.patreon.com/PatrickBoyleOnFinanceBuy Me a Coffee: https://www.buymeacoffee.com/patrickboyleVisit our website: https://www.onfinance.orgFollow Patrick on Twitter Here: https://bsky.app/profile/pboyle.bsky.socialBusiness Inquiries ➡️ sponsors@onfinance.orgAlice evans Blog: https://www.ggd.world/p/why-are-chinese-marriages-plummetingGoodhart & Pradhan - The Great Demographic Reversal: https://amzn.to/4iswSgWFT - The Relationship Recession: https://www.ft.com/content/43e2b4f6-5ab7-4c47-b9fd-d611c36dad74FT - The New Global Gender Divide: https://www.ft.com/content/29fd9b5c-2f35-41bf-9d4c-994db4e12998

## Transcript

[0:00] Birth rates are falling around the world, and while this might
[0:03] seem like nothing new, as it's been the case in developed
[0:06] countries for quite some time, the number of newborns in Japan
[0:10] fell 5% last year, and birth rates hit record lows in England
[0:15] and the United States, too. The thing that's interesting is
[0:19] that we're seeing declining birth rates everywhere, and the
[0:23] standard explanations that you've heard in the past don't
[0:26] really hold up. The first contraceptive pill was
[0:29] approved by the FDA in the United States in 1960, and over
[0:34] the next 20 years, the average number of children born to
[0:38] American women halved from almost four to two.
[0:41] The pill had a major impact on society and culture.
[0:45] It contributed to a sharp increase in female college
[0:48] attendance and graduation rates over that 20 year period, the
[0:54] number of marriages only fell slightly.
[0:56] The fertility, which is the expected number of children born
[1:01] per woman in her child bearing years, sits at 1.44 children per
[1:06] woman today in the UK and 1.64 children per woman today in the
[1:11] United States. The replacement fertility rate
[1:15] which would keep the population steady is 2.1 births per woman
[1:19] in the developed world, but it can be as high as 3.5 in
[1:23] undeveloped countries because of higher mortality rates.
[1:27] There are a lot of of reasons given for the falling birth
[1:30] rates in wealthy countries. Most obviously increased access
[1:34] to contraception, but also improved education and career
[1:38] opportunities for women, the rising cost of living and
[1:41] raising children, and and changing societal values and
[1:44] family structures. The interesting thing though, is
[1:48] that birth rates are collapsing everywhere, not just in the
[1:51] developed world. Tunisia, Turkey, Tamil Nadu,
[1:55] Guatemala and Mexico are all experiencing similar declines.
[2:00] According to research from my colleague Alice Evans at King's
[2:03] College London, Turkey has a lower birth rate than the UK
[2:07] does and Mexico has a lower birth rate than the United
[2:11] States. When you look at the factors
[2:13] that can be blamed, for example the high cost of raising and
[2:17] educating children or working women marrying later, they don't
[2:21] apply in every country where fertility rates are declining.
[2:25] According to Alice, the initial drop in US fertility can be
[2:29] attributed to couples having fewer children, but in recent
[2:33] years the major contributing factor is the decline of
[2:37] coupling. People are either pairing up
[2:39] later in life and thus having fewer children, or or staying
[2:43] single and having no children. Other explanations that you'll
[2:47] likely have heard are that fertility rates are dropping
[2:51] because women are spending more time in education, or that
[2:54] fertility rates fall when women focus more on their careers than
[2:58] they did in the past. It's often reported that people
[3:02] just decide to have fewer children when countries become
[3:05] more prosperous, but according to Alice, the decline is most
[3:09] pronounced among societal groups with less education rather than
[3:13] more. Her data shows the coupling is
[3:16] not only declining in wealthy Western countries, but also in
[3:20] East Asia, Latin America and most severely in the Middle East
[3:24] and North Africa. In Turkey and Tunisia, the
[3:27] fertility rate has fallen to 1.5 children per woman, which is a
[3:32] bigger problem than the 1.44 in the UK as the replacement rate
[3:37] in the developing world is much higher than in the developed
[3:40] world because of higher mortality rate.
[3:43] In countries with different wealth, different cultures,
[3:46] different religiosity and where people face very different
[3:50] problems, fertility has gotten very low and is continuing to
[3:54] fall. So why should we be concerned
[3:57] about this? For decades, people were
[3:59] worrying about overpopulation. Well, from a financial
[4:03] perspective, as US countries face both aging and declining
[4:07] populations and a smaller workforce in relation to the
[4:10] number of retirees, it could cause all sorts of economic
[4:14] problems. Charles Goodheart and Manoj
[4:17] Pradhan wrote a book, The Great Demographic Reversal, on the
[4:20] economic effects of these demographic changes and how
[4:24] governments and policy makers have not prepared for this
[4:27] issue. The the situation, according to
[4:30] Pradhan and Goodheart, is that birth rates began their decline
[4:34] in Europe in the 1950s and have gotten worse since then.
[4:38] The low birth rates, combined with the extension in lifespans
[4:42] that we've seen in developed countries have meant a rapid
[4:45] decrease in the ratio of people in the labor force to people
[4:49] over the age of 65. This ratio has already reached
[4:54] levels where the fiscal sustainability of the social
[4:57] contract of finance in healthcare and pensions has come
[5:01] under threat, but this ratio will continue to decline in the
[5:04] future. According to Land Pritchard at
[5:07] the London School of Economics, if no migration occurs, by 2050,
[5:12] Italy will have .88 people in the labor force for everyone
[5:17] over the age of 65. No economy in history has ever
[5:22] had dependency ratios that high. In the post war period when
[5:27] European social programs were introduced, there were eight
[5:30] workers for every retiree. Pritchett points out that
[5:34] because the elderly require a lot of care, there simply won't
[5:38] be enough workers to do that work in the near future.
[5:42] He says that if you want to maintain the support ratio of
[5:45] workers to those over the age of 65 at its current level, the
[5:50] rich world would need to import 450 million workers in the next
[5:55] 20, 25 years. Japan currently has the lowest
[5:59] ratio of workers to retirees, with 1.83 workers per person
[6:04] over the age of 65. Jesus Fernandez Villaverde from
[6:08] the University of Pennsylvania analyzed the GDP of advanced
[6:13] economies per working age adult instead of growth per capita and
[6:18] found that Japan is a surprisingly productive economy
[6:22] once demographics are taken into account.
[6:25] Since the global financial crisis, he found that Japan has
[6:29] the highest growth rate in output per working age adult in
[6:33] the countries he studied at 1.49%, surpassing the US growth
[6:38] rate of 1.34%. But the problem is the country's
[6:43] terrible demographics. Based on his research, this is
[6:48] the cause of Japan's malaise. Unfortunately, without
[6:52] migration, every rich country in the world will have a lower
[6:56] ratio of workers to retirees by 2050 than Japan has today.
[7:02] This isn't really based on projections either. 2050 is just
[7:06] around the corner, and most of the people who will be of
[7:09] working age by 2050 have already been born.
[7:12] Today, you might think that the solution is just for people to
[7:16] extend their working lives. After all, if we're living
[7:19] longer and we're healthier than ever before, maybe we can work
[7:23] into our 70s. While this might be necessary,
[7:27] it would be very difficult from a political perspective.
[7:30] In 2022, the French President announced that he would
[7:34] gradually raise the retirement age from 62 to 65.
[7:39] Retirement age would be extended by three months per year from
[7:42] September 2023 to September 2030.
[7:46] This led to massive demonstrations and strikes.
[7:50] Raising the retirement age in the developed world wouldn't
[7:53] help very much anyway, as according to Pritchett's
[7:56] analysis, there's aging amongst the aged.
[7:59] Most of the people over 65 are well over 65.
[8:04] A lot of the growth in the population is people in their
[8:08] 80s and 90s. Pradhan and Goodhart argue in
[8:11] their book that the demographic changes that are occurring will
[8:15] have massive economic effects. They point out that while global
[8:19] inequality has declined over the last 30 or so years, within
[8:23] country, inequality has increased.
[8:25] This increase in inequality in the developed world has led to
[8:29] the rise of populist leaders who promise to fix it.
[8:32] Pradhan and Goodheart say that this inequality dynamic is
[8:37] mostly explained by a shock in the supply of Labor brought
[8:41] about by globalization. They say that we've already
[8:45] reached peak globalization a few years ago as there was nowhere
[8:49] else to go to build factory staffed by cheaper labor.
[8:53] They argue that globalization over the last 30 years or so was
[8:58] deflationary as while working wages didn't rise in the
[9:01] developed world, the cost of goods that we consume fell in
[9:05] price and increased in quality for the price we pay.
[9:09] They point out, much like LAN Pritchett does, that the
[9:12] services required by the elderly can't be shipped in from abroad
[9:16] the way clothing and electronics can.
[9:19] As the consumption of Western consumers switches from physical
[9:23] goods towards healthcare and personal services services, they
[9:26] argue that the deflationary effects of globalization will
[9:30] reverse. On top of this, as the supply of
[9:34] workers falls, their bargaining power in wage negotiations will
[9:38] grow. We're already seeing shortages
[9:40] of Labor in the developed world, and as the working age
[9:44] population declines and the consumption basket changes, this
[9:48] can be expected to become more of a problem, especially if
[9:51] immigration restrictions stay in place or grow good, hard and
[9:56] proud on expect to see a decline in inequality in the developed
[10:00] world, But unless there's a major productivity boost, they
[10:04] say that we can expect to see reduced output and suffer many
[10:08] of the problems seen in Japan today.
[10:11] These economists have a very different world view to the
[10:14] Silicon Valley visionaries who are telling us that AI
[10:18] breakthroughs will cause mass unemployment in the near future.
[10:22] Alice Evans points out that South Indian states have seen a
[10:26] collapse in fertility equivalent in Western countries.
[10:30] Tamil Nadu has the lowest fertility rate at 1.4.
[10:35] But in Tamil Nadu, only 29% of women work outside the home.
[10:40] This means that the average man will be supporting himself, his
[10:44] wife and kids along with two sets of elderly parents.
[10:48] This is quite a burden for one wage earner who also has to
[10:52] presumably prepare for his own retirement.
[10:55] Goodheart and Pradhan point out that as society ages, we can
[10:59] expect to see retirees spend down the savings that they've
[11:03] accumulated during their working lives.
[11:06] They argue that they should push up interest rates in the coming
[11:09] years. They argue that retirement ages
[11:12] will have to increase and tax rates will have to go up to pay
[11:16] for senior benefits. They say that if tax rates stay
[11:20] the same, the expectation is then that there'll be lower
[11:24] payouts for retirees. They say that lower retiree
[11:27] benefits might incentivize the working age population to save
[11:31] more for retirement as they see the social safety net failing.
[11:36] So what's causing this fertility decline all over the world?
[11:40] According to Alice Evans, and I'll put a link to her blog in
[11:43] the description as it's a really fascinating read.
[11:46] It can't be explained by many of the factors that we've heard in
[11:50] the past, as it's happening all over and in parts of the world
[11:54] where those factors don't apply. She argues that the decline in
[11:58] birth rates around the world is not driven by the decisions made
[12:02] by couples to have fewer children, but from a decline in
[12:06] the number of couples. She says that had US marriage
[12:10] rates and cohabitation rates remained constant over the last
[12:13] decade, America's total fertility rate would actually be
[12:17] higher today than it was in the past.
[12:20] The issue is not declining rates of child bearing, but declining
[12:25] rates of coupling. Some have put forth that this
[12:28] could be driven by women outpacing men in college
[12:31] enrolment and graduation, and that maybe they're refusing to
[12:35] pair up with less successful men.
[12:37] The thing is that we see this decline in fertility rates in
[12:41] the Middle East and North Africa, where female educational
[12:44] attainment is lower than male educational attainment.
[12:48] One of the few places where fertility rates have not
[12:51] declined is in North India. And in North India, the ratio of
[12:55] male to female university enrolment is the same as in the
[12:59] United States, where more women enrol in universities and more
[13:03] women graduate. Well, is it that women have been
[13:06] more economically successful in recent decades and they just
[13:10] don't need a man to support them?
[13:12] That doesn't seem to be the case either.
[13:15] South Korea has the largest gender pay gap in the OECD, but
[13:19] South Korean women are still choosing to go it alone and have
[13:23] a fertility rate half that of the United States.
[13:27] Is it the cost of living or the cost of educating a young child?
[13:31] After all, I have friends who told me that they couldn't have
[13:34] another child because of how expensive private schools have
[13:38] become. This might explain lower birth
[13:40] rates in expensive cities, but it doesn't hold in the Middle
[13:44] East and North Africa. And when we look at a list of
[13:47] the least expensive countries to raise a family, we can see that
[13:51] they all have declining fertility rates too.
[13:54] To be clear, I'm not saying that the cost of living crisis is not
[13:58] a problem, just that it's not the primary cause of declining
[14:02] birth rates. Surveys of parent attitudes show
[14:06] that the cost of living is on their list, but it's rarely near
[14:09] the top. And there are large parts of the
[14:12] world where the cost of living has not exploded.
[14:15] And in those places, people are not coupling up and birth rates
[14:19] are in decline. It's often claimed that young
[14:22] wealthy people are waiting longer to couple up and have
[14:25] children as they're having fun and spending their income on
[14:28] themselves. But the numbers show that the
[14:31] drop in relationship formation is steepest amongst the poorest
[14:35] in society. So it's not about wealth.
[14:39] The The trend is global, according to Alice.
[14:41] Around the world, falling birth rates are increasingly driven by
[14:46] a relationship recession amongst young adults.
[14:49] Which leads us to the question, have humans become like pandas
[14:53] who just refuse to reproduce? Now, it's long been my opinion,
[14:57] though I've done no research on this, that the reason pandas
[15:01] don't breed in captivity is that zookeepers keep feeding them
[15:05] bamboo. And let's be serious, that's not
[15:08] going to be easy to digest best. And the zookeeper wouldn't be in
[15:11] the mood either if he'd eaten a 2 by 4 for lunch.
[15:15] One of the interesting things that Alice Evans has found is
[15:18] that in countries all over the world, a wide political gap has
[15:22] opened up between young men and young women.
[15:25] John Bern Murdoch covered this a few months ago in the FT, where
[15:30] he writes that 10s of millions of young people who occupy the
[15:34] same cities, workplaces, classrooms and even homes no
[15:38] longer see eye to eye politically in the US.
[15:42] Gallup data shows that after decades where the sexes were
[15:46] each spread roughly equally across liberal and conservative
[15:50] world views, women aged 18 to 30 are now 30 percentage points
[15:55] more liberal than their male contemporaries.
[15:58] And possibly more surprisingly, that gap took just six years to
[16:02] open up. German data and British data
[16:06] also show a similar gap between increasingly conservative young
[16:10] men and progressive young women. He writes that in Poland last
[16:14] year, almost half of men aged 18 to 21 backed the Hard Right
[16:19] Confederation Party, compared to just a 6th of young women of the
[16:24] same age. Similar political divisions can
[16:27] be seen all over the world, where studies show that the
[16:30] political divide between genders has grown massively for those
[16:34] under the age of 30, while older age groups remain evenly
[16:38] matched. And the political division
[16:41] between the genders is particularly wide in China and
[16:44] South Korea. While studies show that young
[16:48] men have become more conservative and young women
[16:50] more liberal, that doesn't mean that falling fertility is due to
[16:54] a shift in women's preferences. Alice writes in her blog that
[16:58] while right and left both assume that men would love to have more
[17:02] kids but fertility is being dragged down by women, surveys
[17:06] show that women have a greater preference for having children
[17:10] than men. It is possible that politics is
[17:13] having the same effect on young people as a high fibre diet is
[17:17] having on PANDAS. An interesting fact is that in
[17:21] the United States, while the overall fertility rate has
[17:24] fallen, women over the age of 30 are having more children than
[17:28] they did in the 1990s. It's only younger women who are
[17:32] having fewer children. And even that decline is
[17:35] concentrated amongst teenagers, where teenage pregnancy has
[17:40] almost entirely disappeared in the developed world.
[17:43] There are some positives associated with waiting longer
[17:47] to have children. According to The Economist, each
[17:50] year a woman goes without having a child, her expected lifetime
[17:54] earnings increases. A woman who has her first child
[17:57] in her 30s can be expected to earn more than twice what she
[18:01] would have earned had she had her first child aged 22.
[18:05] While most politicians and policymakers are ignoring their
[18:09] country's demographic problems, some countries are offering to
[18:12] pay their citizens to have children.
[18:15] The Economist writes that working class women's fertility
[18:19] is more responsive to financial circumstances than that of their
[18:23] richer peers. Xinjiang, a province in China,
[18:27] is offering newly married couples a lump sum, but only if
[18:32] the bride is below the age of 25.
[18:34] In Russia, women who have a child before they turn 25 will
[18:39] soon be exempt from income tax. Hungary offers a similar benefit
[18:43] to mothers who have their first child before 30.
[18:47] The reason that these incentives are being offered to young women
[18:50] is that women who start having children young tend to have more
[18:54] children over their lifetime. According to Alice Evans, While
[18:58] these baby bonuses may be well meaning, they are putting the
[19:02] cart before the horse when a growing share of young people
[19:05] are without a partner to begin with.
[19:08] So what is the driving factor then?
[19:10] Why are we seeing a worldwide decline in coupling political
[19:14] division between young men and women?
[19:17] And why are young people staying at home rather than meeting up
[19:20] with each other all at once all over the world?
[19:24] The last two questions there possibly gave you a hint to the
[19:28] answer to the question. The huge change that took place
[19:32] in recent years all over the world that changed how people
[19:35] interact with each other and changed the media they consume.
[19:39] With the proliferation of smartphones and social media.
[19:43] According to Alice's research, geographical differences in the
[19:47] decline of coupling amongst the young broadly tracked mobile
[19:52] Internet usage. John Byrne Murray writes in the
[19:55] FT that this is consistent with research showing that social
[20:00] media usage has driven the spread of liberal values
[20:03] worldwide, mostly amongst women. One of the few parts of the
[20:08] world where marriage rates have stayed high is South Asia.
[20:12] Alice writes that in South Asia, caste and kinship networks are
[20:16] secured through marriage, which remain vital for status and
[20:20] social inclusion. Young women are constantly being
[20:24] asked by their relatives, when are you getting married.
[20:27] This chart shows that not only is mobile Internet usage lower
[20:31] in South Asia than in the rest of the world, but on top of
[20:34] that, the gap between male and female Internet usage is
[20:38] particularly wide. According to Pew Research, 46%
[20:43] of American teens say that they use the Internet almost
[20:47] constantly, up from 24% of teenagers who've said the same a
[20:51] decade ago. Young men and women watch
[20:54] different content and report that they would often prefer to
[20:58] stay at home on social media or playing video games rather than
[21:02] going out and spending time with friends. 40 years ago, Neil
[21:06] Postman wrote the book Amusing Ourselves to Death.
[21:10] The idea behind the book came from a talk Postman gave on
[21:14] George Orwell's book 1984. In his talk, he argued that the
[21:18] contemporary world in the mid 1980s was better reflected by
[21:23] Aldous Huxley's Brave New World rather than by George Orwell's
[21:28] 1984. In Brave New World, the public
[21:32] were oppressed by their addiction to amusement rather
[21:35] than state violence. Postman saw televisions
[21:38] entertainment value in the 1980s as being equivalent to the
[21:42] fictitious drug Soma in Brave New World, which citizens took
[21:47] exchanging their rights for entertainment.
[21:50] At least in the 1980s, we didn't carry our televisions around
[21:54] with us wherever we went. I'm sometimes amazed when I see
[21:58] young people out with their friends, all staring at their
[22:01] phones rather than talking to each other.
[22:04] Are more worried about photographing their food at a
[22:06] restaurant for social media than enjoying it.
[22:09] About 10 years ago my friend Adam Robertson was using Google
[22:14] to try to work out what people were trying to learn on the
[22:17] Internet. He typed in the search term how
[22:20] can I learn and then allowed Google to auto fill the rest of
[22:24] the question. He wanted to see the list of
[22:27] Google suggested searches The top responses were mostly
[22:30] languages. I did a similar check right
[22:33] before making this video and the top search was how can I learn
[22:37] AI and then Python but I after that a few languages.
[22:41] But the thing that really shocked Adam at the time was the
[22:44] number five suggestion was how can I learn to love myself?
[22:49] Because these suggestions are customized to the user.
[22:52] Adam wondered if this suggested search term was just for him,
[22:57] and so he texted some friends and asked them to follow the
[22:59] same steps. He found that while the order of
[23:03] suggestion shifted around a bit, almost everyone had that
[23:06] question in the top five of their suggested searches.
[23:10] So why did he find it so interesting?
[23:13] Well, all of the other search engines, he points out, were
[23:16] about classes and were things that you could ask a friend.
[23:19] But he noted the shame embedded in that search term.
[23:23] He was also shocked that so many people were searching it that it
[23:26] was being algorithmically suggested.
[23:29] He felt that it was a terrifying glimpse into the loneliness
[23:32] epidemic all around us. A recent paper in Nature
[23:36] magazine shows the importance of social connections not just for
[23:41] happiness but also for health. The researchers found that while
[23:45] being educated, employed, wealthy and physically active
[23:49] are all amongst the most life extending factors, living with a
[23:53] partner is almost as beneficial in terms of longevity as
[23:56] exercises. The researchers found that
[24:00] regular visits with family or having someone to confide in
[24:04] appeared to lower mortality rates.
[24:07] A paper by Platt and Sterling argues that social isolation has
[24:11] led to an epidemic of despair that's driving down fertility
[24:16] rates worldwide. They pointed to a catastrophic
[24:19] rise in anxiety, depression and obesity related diseases that
[24:24] correspond with the rise of digital culture where people are
[24:27] interacting with screens more than with each other.
[24:31] The problems, they say, are worse amongst teenage girls who
[24:35] are reporting high rates of depression and a desire to end
[24:39] it all. The real take away from this
[24:42] podcast is to put down your phone and get out there in the
[24:45] world and interact with real people.
[24:47] Have a great week and talk to you again soon.
[24:50] Bye.

Shows are listed from Apple Podcasts' charts and directory, and Podcast Index where it is used. Every show and episode belongs to its publisher and plays from the publisher's own feed; this site hosts none of them.