I must admit from the onset that I cannot really be very critical of Massimo Livi-Bacci's work, because much if not most of what I know of historical demography I learned from him, and thus if I were overly critical of him, I would be in the position of spitting into the well from which I have drunk. This is a nice and well-argued paper, although for those of us who have been keeping up with Livi-Bacci's books, there is little here that we did not know before or at least were prepared to believe. But his essay, all the same, is so informed and so chock-full of insights that it inspired me to try to formalize and reflect on some of the things that he talks about, and how we should think about demographic shocks and the impact of political and economic events on mortality, fertility, and similar variables.Demography ; Economic conditions

Joel Mokyr

English

Research Papers in Economics

DEMOGRAPHIC SHOCKS:T HE VIEW FROM
HISTORY. DISCUSSION
Joel Mokyr*
I must admit from the onset that I cannot really be very critical of
Massimo Livi-Bacci’s work, because much if not most of what I know of
historical demography I learned from him, and thus if I were overly
critical of him, I would be in the position of spitting into the well from
which I have drunk. This is a nice and well-argued paper, although for
those of us who have been keeping up with Livi-Bacci’s books, there is
little here that we did not know before or at least were prepared to
believe. But his essay, all the same, is so informed and so chock-full of
insights that it inspired me to try to formalize and reﬂect on some of the
things that he talks about, and how we should think about demographic
shocks and the impact of political and economic events on mortality,
fertility, and similar variables.
What are demographic shocks? In a Malthusian framework, we can
distinguish between two types of shocks, permanent and transitory. Let
me try to explain this using a very simple framework, and then try to
make it a bit more sophisticated. To set up a Malthusian model we need
to assume as a ﬁrst approximation that there is no emigration, so that
population change is simply births less deaths. Second, we need to
assume that this system behaves like a Malthusian model, that is, when
income rises, births go up and deaths go down. Third, we need to assume
that income is concave in relation to population, as Malthus maintained
and almost all economists believe. This leads to the following different
cases of “demographic shock” (see Figures 1 to 5).
*Robert H. Strotz Professor of Arts and Sciences and Professor of Economics and
History, Northwestern University.68 Joel MokyrDEMOGRAPHIC SHOCKS: THE VIEW FROM HISTORY: DISCUSSION 69The ﬁve ﬁgures are based on the simple idea that the BB curve is
upward sloping, reﬂecting the increase in fertility resulting from higher
wages (due possibly to higher marriage rates, higher fecundity rates, lower
miscarriage rates, and so on). The DD curve reﬂects lower death rates
associated with higher wages. By deﬁnition the intersection of the two
curves reﬂects population equilibrium. The curve on the right panel simply
reﬂects a declining marginal product of labor with higher levels of popula-
tion. At a point like W* in Figure 1, population is stable; its level is given by
P*.
This simple set-up can be used to show the effects of different shocks, as
explained in the ﬁve diagrams. As always, there is a difference between
deviations from equilibrium that lead to temporary shocks and a return to
equilibrium (as shown in Figure 1) and shifts of the relationships denoted in
the curves. In Figure 2, some events such as war shift the marginal product
of labor to the left. In Figures 3 and 4, the DD and BB curves shift out
permanently, thus administering permanent shocks, resulting in different
equilibrium levels of wage and population. Finally, in Figure 5 there is a
different order of shock: The system changes from an equilibrium to a
disequilibrium system if the BB curve becomes positively sloped and may
face permanently declining population at higher and higher wages.
Why would BB be positively sloped? The answer is that if people
have high incomes, they can consume a lot. But consumption of many
70 Joel Mokyrthings, from ski vacations to elaborately cooked dinners, takes time, and
so do children. Under certain reasonable assumptions about the nature of
children, it can be shown that people will “consume” fewer of them as
income goes up. If that is the case, the BB curve may rotate and acquire
a negative slope (Figure 5). It is hard to think of this situation, which
Livi-Bacci describes in detail, as a “shock” or a “crisis.” Instead, what we
have is a behavior that in purely Darwinian terms is somewhat perverse
but by now must be acknowledged to be a reasonable approximation to
what is happening in much of the Western world. As income per capita
rises and the time-intensity of the consumption packet increases, people
reduce the number of children. All other things equal, this will cause
income to rise even faster, and that will exacerbate the trend. It is possible
that a move to the left of the DD curve will weaken this trend: Fewer
people are born, but they live longer. This will help, but unless the
perverse BB curve’s slope turns to zero, this will not reverse the trend.
This model will take us only that far. It explains some historical
events such as the Black Death and the Irish Famine that Livi-Bacci
describes, but it has a hard time analyzing a great deal of the variability
in modern demographic history. The framework applies most fruitfully
to what I regard as the greatest shock to demographic history, one that
Livi-Bacci does not quite address as much as I would have liked him to,
namely the decline in infectious diseases in the Industrialized West after
1870 or so. The fall in infectious diseases relentlessly drove down
mortality rates, so that when effective cures appeared after 1945, the
demographic impact of these diseases had already been attenuated. This
historical phenomenon underlines the need for a ﬁeld of study that I will
call somewhat lugubriously “the economics of death.” It is based on the
idea that people do not choose to die, normally, but their life expectancy
depends on economic decisions such as consumption and the allocation
of resources within the household. In a nutshell, the goods and services
that people consume and the way they spend their time affect their health,
often as a by-product of other utility-producing activities. The idea of
“goods” here should be taken broadly: Health is inﬂuenced not only by
diet, doctor’s visits, exercise, and lifestyle, but also by residential location
and occupational choice. It is also a function of how much time people are
willing to spend on health-enhancing housework such as cleaning,
cooking, and child care.
I propose a general framework in which life expectancy (or its
obverse, “death”) depends on three sets of constraints: income, relative
prices, and knowledge. Income should be rather obvious: When income
goes up, all goods with positive income elasticity go up in quantity. That,
normally, will enhance health unless people have an especially high
income elasticity for health-reducing goods such as narcotics or motor-
cycles. Changing relative prices are, of course, very pervasive. Much
institutional change manifests itself as changes in relative prices. For
DEMOGRAPHIC SHOCKS: THE VIEW FROM HISTORY: DISCUSSION 71instance, the crumbling of the medical infrastructure in the post-Soviet
Russian Republic has raised the relative price of goods that affect health
positively relative to other goods; as a result, health has declined more
than the fall in income alone would have predicted. On the other hand,
the improved public health services in many less developed countries
after 1950 increased life expectancy more than income growth would
have suggested, because it reduced the relative price of health-enhancing
goods.
The framework I delineated above serves well to explain this event.
The rise in income, as McKeown and others have steadfastly maintained,
increased the consumption of goods that improved health: fresh fruits
and vegetables, high-protein foods, home-heating, hot water, cleaning
materials, and so on. At the same time, growing government intervention
and public health measures reduced the relative price of clean and safe
water, the price of waste disposal and of protection against insects, and
the costs of verifying the safety of food and drink. Not all changes in
relative prices were the result of public health measures: Technological
change in a variety of areas contributed as well. Filtration and chlorina-
tion of drinking water, refrigerated ships, pasteurization techniques,
electrical home-heating, all reduced the price of health-enhancing goods.
Yet, as I have argued in a string of papers as well in my forthcoming
book, this is not enough. What matters is what consumers believed about
their health and how they adapted their consumption to maximize
simultaneously their health and their direct utility from consumption.
This is a hard issue, since we cannot readily measure consumer belief. Yet
it stands to reason that the average consumer in large parts of the world
in 1914 knew a great deal more than the consumer of 1860, and that it is
unthinkable that he or she would not have adjusted behavior accordingly.
By 1914, a large proportion of the population knew that water could be
dangerous even if it looked, tasted, and smelled clean; they knew that lice
transmitted typhus and mosquitoes malaria and yellow fever; they knew
that certain diseases could be transmitted directly by air and others
through food only; and that by boiling water and thoroughly cleaning
baby bottles, the likelihood of diarrhea could be reduced. All this meant
major changes in household behavior on many fronts. It is this “shock,”
more perhaps than even the two world wars, that has created the
demographic structures of the modern world.
The three factors at play here can be readily illustrated in a simple
diagram. Assume for simplicity that there are only two goods; one of
them (A) is health-enhancing (“grapefruits”) and the other (B) is health-
neutral (“videocassettes”). The consumer likes both goods, but the
demand for A, in addition to its direct utility, also enhances health and
to the extent that the consumer knows this and takes it into account, she
will normally consume more of the good than the primitive utility-
maximizing quantity. The question is: How much does the consumer know?
72 Joel MokyrFigure 6 demonstrates this idea. The extreme possibilities are the
totally uninformed (“primitive”) consumer who entirely fails to take
account of the indirect effect of good A on her health (at E ˆ) and the fully
informed consumer who has full knowledge of this effect and optimizes
consumption at E. In between, there are partially informed consumers.
The shock that the new bacteriology and nutrition science that emerged
between 1880 and 1940 administered to the system was a move from
something like E* to E**, leading to a rise in health (measured, for
example, by life expectancy) from H ˆ to H**. This change would be
equivalent to a shift of the DD curve to the left, which in a Malthusian
regime would have meant lower wages. By the twentieth century, of
course, the Malthusian model no longer applied. The greatest demo-
graphic shocks in modern history, then, must be the regime change and
the knowledge revolution, which created an entirely new demographic
world that Professor Livi-Bacci rightly regards as the great challenge to
his profession.
DEMOGRAPHIC SHOCKS: THE VIEW FROM HISTORY: DISCUSSION 73

Demographic shocks: the view from history: discussion

http://www.bostonfed.org/economic/conf/conf46/conf46c2.pdf

Demographic shocks: the view from history: discussion

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