Saturday, November 16, 2013

Demographic Dividend or Population Problem - Incomes

In the previous post, I spoke about the second factor required to maintain population in a country -per capita income. aka, enough money to keep body and soul together.

In that piece, we spoke about the impact of individual choices on family incomes and standards of living. These individual choices aggregate as national poverty statistics. The worst part of these wrong choices is that they lead to actual child abuse meted out by parents. But there is very little punitive action against parents who are responsible for abuse and child labour by their children.

In this piece, lets look at the per capita income and population from a different perspective. I googled to find out if a study has happened on the impact of family size on per head income in the family.

Here is a chart taken from a book called Human Development in India:

Image Courtesy - book Human Development in India

Lets break down this total income into per capita income by family size.

If the family has:
1 member : per capita income i likely to be 13435

At 2 members, however, that number is not 26870, it is 24000. Per capita income - 12000

3 members : per capita income - 10067 INR

4 member : per capita income - 9863 INR

5 member: per capita income - 10510 INR

we cannot calculate per capita income because the report says 6+, so the number could be for 6 member households or 11 member households.

So, with every member that we add to the family, our average per capita income diminishes almost uniformly, except for one spike at family size of 5.

Ceveat: The book mentions that because of economies of scale, a large family living together will spend less and so their total net worth will be higher..

Endpoint: A bigger family by itself does not mean higher income for the family. More people do not, by definition mean higher income for the country.

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