The Predictive Power of Wealth
Neomalthusianism and Earth’s Carrying
Capacity
Thomas Martin, Devin Christensen, Aaron
Konichek, Brian Beadle, Lovro Kuspilic,
Kane Wong
University of Wisconsin-Stevens Point
Malthus’ Original Argument
• Population increases exponentially
• Food production increases linearly
• There will reach a point at which population
overtakes food production, and that point is
the carrying capacity of Earth.
Problems with Malthus
Malthus was wrong.
• The Earth still has a carrying capacity.
• Some of Malthus’ concepts about the point at
which population growth will approach food
production are still viable.
Assumptions:
1. Maximum net wealth is bounded by the
resources of the planet, and Earth’s resources
are finite.
2. Holdings near the carrying capacity can only
be considered wealth if they can be traded
for subsistence goods.
3. The amount of wealth actually traded for
subsistence goods at any given time
represents the current population level.
Assumptions: cont.
4. The difference between actual wealth and
the amount spent on subsistence goods is
some function of wealth inequality
preferences.
5. The efficient level of wealth inequality will
always be positive.
_
6. Knowing something about the production of
wealth, the population growth rate, and/or
wealth inequality trends can help us predict
the maximum sustainable population.
Wealth,
Pop
Limit of Resources
Carrying Capacity
(total food output)
Wealth
Inequality
Industrial Revolution
Population
(total food consumption)
Time
Neomalthusian Prediction:
• Malthus’s predicted carrying capacity was
wrong, but his theory was right. There will be
a point at which population is limited by the
total amount of food that can be produced.
• The question today is where are we now?
Inequality
• As the population approaches the carrying
capacity, people’s shares of food will become
more equal.
• Any asymptotic relationship between
population and carrying capacity will
represent the long-term equilibrium level of
inequality.
Inequality: Ratio of Income Deciles
United States
Denmark
Inequality: Ratio of Income Deciles
Inequality: GINI
• The GINI Index
– Ratio between the current state of inequality in a
place (modeled by the Lorenz curve) and the state
of perfect equality.
1= Perfect Inequality
0= Perfect Equality
Inequality: Canada
Inequality: Netherlands
Inequality: Germany
Inequality: MENA
Wealth,
Pop
Limit of Resources
Carrying Capacity
(total food output)
Wealth
Inequality
Industrial Revolution
Population
(total food consumption)
Time
We know there exists a relationship between
the population and the total number of people
the Earth can support, and we know that
relationship has something to do with inequality
preferences. But the data available for
inequality (any measure) isn’t capable of making
any strong predictions one way or another.
Population
Population
• All of the industrialized world has gone
through (or is in the process of going through)
the demographic transition.
• Assumption: Before we completely “fish out”
technology, every country will have completed
the demographic transition, so High-Income
OECD population trends are predictive of
future world trends.
Population: High-Income OECD
Crude Birth Rate: High-Income OECD
Technology
• Assume that the Earth is fixed capital.
• There is a limited amount of food that can be
produced on Earth (law of diminishing
marginal product of variable inputs).
• Recall: Wealth at the carrying limit is only that
which can be traded for food (food is a
perfectly liquid currency)
NOT Technology
Wealth,
Pop
Limit of Resources
Carrying Capacity
(total food output)
Wealth
Inequality
Industrial Revolution
Population
(total food consumption)
Time
Moore’s Law
• Gordon Moore predicted this trend in 1965
• Observation that over the history of computing hardware, the
number of transistors on circuits doubles every 18 months
Moore’s Law
• On April 23, 2005 Gordon Moore Stated:
– “It can't continue forever. The nature of
exponentials is that you push them out and
eventually disaster happens.”
Technology
Bringing it together
Limit of Resources
Carrying Capacity
(total food output)
Wealth
Inequality
Industrial Revolution
Population
(total food consumption)
Conclusion
Wealth,
Pop
Limit of Resources
Carrying Capacity
(total food output)
Population
(total food consumption)
Industrial Revolution
Time