More People is Good in Theory

I believe that, other things being equal, more happy lives is a good thing. Others seem to agree.

But people worried about rising population are quick to point out the costs that new people impose on others. For example, more people leads to more scarcity.

Setting aside the empirical question for now, is it even true in theory that a new person takes more than they give?

The discussion reminds me of the lump of labor fallacy surrounding immigration. Opponents typically focus on the fact that immigrants provide labor without considering the fact that they also increase demand. The same is true of Malthusian views; they focus on the fact that new people are “mouths to feed” while ignoring the fact that new people typically end up feeding themselves and others.

To counter these arguments, I can think of several reasons why population growth brings theoretical benefits.

First, there are some things you simply cannot do with less people. Certain tasks require hundreds or thousands of people working in parallel in order to complete them in a reasonable timeframe1. Population thus opens up new opportunities which weren’t possible with less people.

Larger population also creates new opportunities for trade. By having bigger groups with more heterogeneous preferences, the gains from trade grow larger. These opportunities increase significantly as people specialize in different tasks. Not only can people utilize their comparative advantage, they can also learn to do a task extremely well. This specialization and trade can bring benefits to everyone.

Specialization has another huge advantage, which is that people can innovate within the specific problem area they are working on. This specialized innovation creates improvements in efficiency which lifts everyone up.

In aggregate, the theoretical connection between population growth and innovation is clear. More people leads to more innovation and continued prosperity. This makes a lot of sense, as more people means more opportunities to make a discovery.

Having more people also means that each new invention is more valuable, since there are more potential customers, stimulating investment in research. To put it another way, the scarcity induced by more consumers creates incentives to alleviate that scarcity. This “necessity is the mother of innovation” idea is a central argument of the book The Ultimate Resource.

Perhaps because of specialization and innovation, many industries exhibit returns to scale and experience curve effects. This means that increasing overall production is associated with efficiencies which reduce costs. Of course, the size of the market is the ultimate constraint of the scale of an industry, and population determines the size of the market. By having more people overall, every product is created at a larger scale, and can take advantage of these efficiencies2.

Simply increasing the scale of the population has other benefits as well. For example, a large, diverse population can be more resilient to shocks3. On top of that, insuring a larger group of individuals becomes easier since one can average individual shocks over more people. More market participants also improves market liquidity, especially for small markets.

Scaling up a population generally increases the total resources available to society and can enable new activities which weren’t previously possible. For example, having more total resources is important in the context of economic catalysis since many barriers can be overcome with a large pool of available talent4.

As Steven Landsburg has pointed out, a larger population means that new social niches can get filled. If you have very specific interests, it can be hard to find others who share your passions. As populations grow, even people with very specific interests can find like-minded individuals and form communities. These niches themselves can take advantage of returns to scale in social organization. All of these factors benefit competitive governance systems like the Archipelago.

These theoretical benefits offer a counterpoint to the oft-noted downsides of a larger population. However, the way these concerns play out in the real world is the true determinant of whether sustained population growth is a good thing. But that is a question for another time.

Notes

1. This also means the projects can move faster and iterate more.

2. Returns to scale benefit every field, including global public goods like catastrophic risk reduction. Some problems do not increase with the size of population (e.g. risks from asteroids) and become relatively easy to solve at larger population.

3. Extending this, larger populations have lower existential risk. This is because it is proportionally harder to wipe out a larger population. Additionally, higher populations lead to higher growth, which has favorable effects on x-risk. Large and growing populations also face incentives to expand out into space, further reducing existential risk.

4. Larger population also increases most talented individual in a group which can have beneficial effects on specialized innovation.

%d bloggers like this: