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An Investing Megatrend: How Demographics and Social Changes are Shaping the Future

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Demographic Megatrends preview

For millennia, people have found support and community through defining factors, ranging from age and race to income and education levels.

However, these characteristics are not static—and drastic demographic changes are starting to create powerful ripple effects in the 21st-century economy.

The Impact of Demographics and Social Changes

Today’s infographic from BlackRock delves into the significant impact that demographics and human rights movements have on global markets. Of the five megatrends explored in this series, demographics are predicted to have the farthest-reaching impact.

Megatrends - Demographics and Social Change

What are Demographics?

Demographics are the characteristics of populations that change over time. These include:

  • Age
  • Gender
  • Race
  • Birth and death rates
  • Education levels
  • Income levels
  • Average family size

As a result, major demographic trends offer both unique challenges and opportunities for businesses, societies, and investors.

The Biggest Shifts

What are the biggest shifts in demographics that the world faces today?

1. Aging Population

The global population is aging rapidly─as fertility rates decline worldwide, those in the 65 years and older age bracket are steadily increasing in numbers.

2. Future Workforce

As the population continues to age, fewer people are available to sustain the working population. For the first time in recorded history, the number of people in developed nations between 20 to 64 years old is expected to shrink in 2020.

3. Immigration Increase

Immigration has been steadily increasing since the turn of the 21st century. Primary migration factors range from the serious (political turmoil) to the hopeful (better job offers).

In particular, areas such as Asia and Europe see much higher movement than others, causing a strain on resources in those regions.

4. Consumer Spending

A steadily aging population is slowly shifting the purchasing power to older households. In Japan, for example, half of all current household spending comes from people over 60, compared with 13% of spending from people under 40.

How Does Social Change Play a Part?

Demographics are the characteristics of people that change over time, whereas social change is the evolution of people’s behaviours or cultural norms over time.

Strong social change movements have often been influenced by demographic changes, including:

  • Ending poverty and hunger
  • Expanding healthcare in developing nations
  • Reforming education quality and accessibility
  • Championing gender and racial equality

Examples of major human rights movements include creating stronger environmental policies and securing women’s right to vote.

Opportunities for Investors

These changes pose some exciting opportunities for investors, both now and in the near future.

Healthcare

Global healthcare spending is predicted to grow from US$7.7 trillion in 2017 to over US$10 trillion in 2022. To meet the demands of age-related illnesses, companies will need solutions that offer quality care at much lower costs—for patients and an overburdened healthcare system.

Changing Workforce

With a declining working population, adapting a workforce’s skill set may be the key to keeping economies afloat.

As automation becomes commonplace, workers will need to develop more advanced skills to stay competitive. Newer economies will need to ensure that automation supports a shrinking workforce, without restricting job and wage growth.

Education Reform

By 2100, over 50% of the world will be living in either India, China, or Africa.

Global policy leadership and sales of education goods and services will be shaped less by issues and needs in the U.S., and more by the issues and needs of Africa, South Asia, and China.

—Shannon May, CoFounder of Bridge International Academies

In the future, education and training in these growing regions will be based on skills relevant to the modern workforce and shifting global demographics.

Consumer Behaviour

Spending power will continue to migrate to older populations. Global consumer spending from those over 60 years is predicted to nearly double, from US$8 trillion in 2010 to a whopping US$15 trillion in 2020.

Investing Megatrends

Demographics and social changes are the undercurrents of many economic, cultural, and business decisions. They underpin all other megatrends and will significantly influence how the world evolves.

As demographics shift over time, we will see the priorities of economies shift as well─and these changes will continue to offer new opportunities for investors to make an impact for the future of a global society.

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Demographics

Ranked: The Most Populous Cities in the World

Where are the world’s largest cities in terms of population? This graphic looks at the top 20 most populous cities in the world.

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most populous cities

Ranked: The Most Populous Cities in the World

More than half of the world’s population currently lives in cities—and as time goes on, it’s clear that more urban dwellers will find themselves living in megacities.

Megacities are defined as urban areas with a population of more than 10 million people. This means that the world’s top 20 most populous cities are all megacities.

This visualization, using data from Macrotrends, shows the 20 most populous cities in the world.

Rapid Urbanization

Today, more than 80% of people in higher income countries find themselves living in urban areas, and in upper-middle income countries the number lies between 50-80%.

Rural-to-urban migration is an increasingly relevant trend in the 21st century. Prospects of better job opportunities and higher wages, along with shifts from agrarian to industrial and service-based economies, are causing mass movement to cities.

How much have the world’s five most populous cities grown in just the last decade?

RankCity 2010 Population 2020 Population Percentage Change
#1🇯🇵 Tokyo36,834,00037,393,000+1.5%
#2🇮🇳 Delhi21,935,00030,291,000+38.1%
#3🇨🇳 Shanghai19,980,00027,058,000+35.4%
#4🇧🇷 São Paulo19,660,00022,043,000+12.1%
#5🇲🇽 Mexico City 20,132,00021,782,000+8.2%

While Tokyo only gained 559,000 people between 2010 and 2020, Delhi gained over 8 million people in the same time frame.

Shanghai grew by over 7 million people. Meanwhile, São Paulo grew by more than 2 million, and Mexico City gained just over 1.6 million people.

Interestingly, Mexico City placed third on the top largest cities list in 2010, but has since experienced slower growth compared to its competitors, Shanghai and São Paulo.

The Most Populous Cities Today

While Tokyo is the world’s most populous city with 37,393,000 people, this number is leveling out due to declining birth rates and an aging population.

Indian and Chinese cities, on the other hand, will continue to grow rapidly in the coming years. In fact, it’s expected that Delhi’s population could surpass Tokyo’s by 2028.

Here’s a closer look at the top 20 most populous cities.

RankCityPopulation
1🇯🇵 Tokyo37,393,000
2🇮🇳 Delhi30,291,000
3🇨🇳 Shanghai27,058,000
4🇧🇷 São Paulo22,043,000
5🇲🇽 Mexico City21,782,000
6🇧🇩 Dhaka21,006,000
7🇪🇬 Cairo20,901,000
8🇨🇳 Beijing20,463,000
9🇮🇳 Mumbai20,411,000
10🇯🇵 Osaka19,165,000
11🇺🇸 New York City18,804,000
12🇵🇰 Karachi16,094,000
13🇨🇳 Chongqing15,872,000
14🇹🇷 Istanbul15,190,000
15🇦🇷 Buenos Aires15,154,000
16🇮🇳 Calcutta14,850,000
17🇳🇬 Lagos14,368,000
18🇨🇩 Kinshasa14,342,000
19🇵🇭 Manila13,923,000
20🇨🇳 Tianjin13,580,000

By 2035, two new cities are expected to crack the top 20 list. Specifically, it’s projected that Bangalore (India) and Lahore (Pakistan) will boot out Tianjin and Buenos Aires. In addition, Guangzhou, Shenzhen, and Chennai are all expected to meet the megacity definition by 2035.

Urban growth will continue mainly in Asia and Africa, as some cities in regions such as Europe actually begin to shrink in population due to aging citizens and declining birth rates. Since 2012, deaths in the EU have actually been outpacing births—and in 2019, there were 4.7 million deaths compared to 4.2 million births, though net migration kept population numbers from falling.

Life in the City

While there are certainly downsides to mass urbanization, like pollution and overcrowding, the upsides clearly outweigh the negatives for most people. Convenience, better jobs, easier access to social services, and higher wages are among the many reasons people are likely to continue to move to cities, even in the post-COVID era.

With the emergence of smart and green cities, the quality of life for many urban dwellers will likely continue to improve, and more large urban areas will morph into megacities.

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Misc

Visualizing the U.S. Population by Race

America is a cultural mosaic—nearly 40% identify as a visible minority today. Here we break down the U.S. population by race by state.

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US population by race

Visualizing the U.S. Population by Race

The American population is a unique mosaic of cultures—and almost 40% of people identify as racial or ethnic minorities today.

In this treemap, we use data for 2019 from the Kaiser Family Foundation, which bases its analysis on the latest American Community Survey (ACS) data from the U.S. Census Bureau. Then we break down the same data on a state-by-state basis.

Growing Diversity in America

As of 2019, here is the current distribution of the U.S. population by race and ethnicity:

  • White: 60.1% (Non-Hispanic)
  • Hispanic: 18.5%
  • Black: 12.2%
  • Asian: 5.6%
  • Multiple Races: 2.8%
  • American Indian/Alaska Native: 0.7%
  • Native Hawaiian/Other Pacific Islander: 0.2%

Note that the U.S. totals do not include Puerto Rico.

However, these race and ethnicity projections are expected to change over the coming years. By the year 2060, it’s expected that the distribution of Non-Hispanic Whites as a percentage of total population will fall from 60.1% to 44.3% of Americans.

YearWhite*BlackHispanicAsianMultiple RacesOther**
202059.7%12.5%18.7%5.8%2.3%0.9%
202557.7%12.7%19.9%6.3%2.6%0.9%
203055.8%12.8%21.1%6.7%2.8%0.9%
203553.8%12.9%22.3%7.1%3.1%0.9%
204051.7%13.0%23.5%7.5%3.4%0.9%
204549.7%13.1%24.6%7.9%3.8%0.9%
205047.8%13.3%25.7%8.2%4.1%0.9%
205546.0%13.4%26.6%8.5%4.5%0.9%
206044.3%13.6%27.5%8.9%4.9%0.9%

Source: U.S. Census Bureau. *Excludes Hispanics **Other includes American Indian/Alaska Native (0.7%) and Native Hawaiian/Pacific Islander (0.2%). Both proportions remain unchanged in these projections.

Interestingly, the proportion of those from multiple racial and ethnic backgrounds will more than double, from 2.3% to 4.9% alongside rising patterns of interracial marriage.

Over time, the U.S. Census has been vastly expanded to reflect the true diversity that the country holds. In fact, it was only from 1960 onwards that people could select their own race—and only from 2020 can those who chose White or Black provide further information on their roots.

A State-by-State Breakdown

Of course, racial diversity in the United States differs widely from region to region.

In the Northeast—particularly the states Maine, Vermont, and New Hampshire—the Non-Hispanic White population accounts for 90% or more of the total. In contrast, Black populations are highest in the District of Columbia (45%) and several Southern states.

LocationWhiteBlackHispanicAsianMultiple RacesAmerican Indian
/Alaska Native
Native Hawaiian
/Other Pacific Islander
Alabama65%27%4%1%2%0%-
Alaska60%2%7%6%8%15%2%
Arizona54%4%32%3%2%4%0%
Arkansas72%15%8%2%2%1%0%
California36%5%40%15%3%0%0%
Colorado68%4%22%3%3%1%0%
Connecticut66%10%17%5%3%0%-
Delaware61%22%10%4%3%0%-
District of Columbia37%45%11%4%3%0%-
Florida53%15%27%3%2%0%0%
Georgia52%31%10%4%3%0%0%
Hawaii20%1%10%39%18%0%10%
Idaho82%1%13%1%3%1%-
Illinois61%14%18%6%2%0%<.01
Indiana79%9%7%2%2%0%-
Iowa85%4%6%2%2%0%<.01
Kansas76%6%12%3%3%1%-
Kentucky85%8%4%2%2%0%-
Louisiana59%32%5%2%2%1%-
Maine93%1%2%1%2%1%-
Maryland50%30%11%6%3%0%-
Massachusetts71%7%12%7%3%0%<.01
Michigan75%13%5%3%3%1%-
Minnesota79%6%6%5%3%1%-
Mississippi57%38%3%1%1%0%-
Missouri79%11%4%2%3%0%0%
Montana86%1%4%1%3%6%-
Nebraska79%5%11%2%2%1%-
Nevada48%9%29%9%4%1%1%
New Hampshire90%1%4%3%2%--
New Jersey55%12%21%10%2%0%-
New Mexico37%2%50%2%2%9%-
New York55%14%19%9%3%0%-
North Carolina63%21%10%3%3%1%<.01
North Dakota84%2%4%1%3%5%-
Ohio79%12%4%2%3%0%-
Oklahoma65%7%11%2%7%8%0%
Oregon75%2%13%5%4%1%0%
Pennsylvania76%10%8%4%2%0%<.01
Puerto Rico1%0%98%-0%--
Rhode Island71%6%17%3%3%0%-
South Carolina64%26%6%2%2%0%-
South Dakota82%2%4%1%2%8%-
Tennessee74%16%6%2%2%0%-
Texas41%12%40%5%2%0%0%
Utah78%1%14%2%3%1%1%
Vermont93%1%2%2%2%1%-
Virginia61%19%10%7%3%0%<.01
Washington68%4%13%9%5%1%1%
West Virginia93%3%1%1%2%0%-
Wisconsin81%6%7%3%2%1%-
Wyoming84%1%10%1%2%2%-
U.S.60.1%12.2%18.5%5.6%2.8%0.7%0.2%

Note: A dash (-) indicates estimates with relative standard errors greater than 30%, which were not included in the data

Of all the 50 states, Hawaii is home to the largest share of Asian populations at 39%. It also has one of the most diverse racial breakdowns in the nation overall, including the highest proportion of mixed race individuals.

Looking to another island, an overwhelming majority (98%) of Puerto Ricans are of Hispanic origins. While it’s not a state, its inhabitants are all considered U.S. citizens.

Charting the U.S. population by race is crucial for a number of reasons. This information can be used to better understand existing income and wealth gaps, track public health outcomes, and to aid in policy decision-making at higher levels.

We become not a melting pot but a beautiful mosaic. Different people, different beliefs, different yearnings, different hopes, different dreams.

—Jimmy Carter, 39th President of the U.S.

Editor’s note: This article has been updated to better reflect U.S. Census Bureau categories.

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