How Demographics and Social Changes are Shaping the Future
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Demographics

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

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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

Animation: The Global Population Over 300 Years, by Country

This animated video shows how much the population has grown over the last three centuries, and which regions have driven this growth.

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Animation: The Global Population Over 300 Years, by Country

Since the 1800s, our global population has grown from 984 million people to almost 8 billion—an increase of more than 700%.

Which regions around the world have led this growth, and what’s expected for the rest of the century? This animated visualization by James Eagle shows 300 years of population growth, including historical figures as well as projections up to the year 2100.

Asia’s Current Dominance

For centuries, more than half of the world’s population has been concentrated in Asia. At certain points throughout history, the region has made up nearly 70% of the world’s population.

Here’s a look at 2021 figures, and how large each region’s population is relative to each other:

RankRegion% of Global Population (2021)
1Asia59.2%
2Africa17.9%
3Europe9.3%
4North America7.5%
5South America5.5%
6Oceania0.6%

China and India have been Asia’s largest population hubs, with China historically leading the front. In the 1950s China’s population was nearly double the size of India’s, but the gap has fluctuated over the years.

As China’s population growth continued, it was causing problems for the country as it struggled to scale up food production and infrastructure. By 1979, the Chinese government rolled out a one-child policy in an attempt to control the situation.

The program, which ended in 2016, had a number of unintended ramifications, but ultimately, it did succeed in slowing down the country’s population growth. And now, India is projected to overtake China as the world’s most populous country as early as 2023.

Africa’s Growing Piece of the Pie

Although Asia dominates the charts when it comes to overall population numbers currently, Africa’s growing population numbers are often overlooked.

While the continent’s total population is smaller than Asia’s, it will soon be home to the world’s largest working-age population, which could have a significant impact on the global economy in the years ahead.

This growth is being led by Nigeria, Africa’s most populous country. With megacities like Lagos (metro population: 21 million) and over 217 million inhabitants in total, Nigeria is projected to be the world’s third most populous country by the year 2050. Nigeria’s rapid growth is largely thanks to its high birth rate, which is nearly double the global average.

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Demographics

Charted: The Working Hours of Americans at Different Income Levels

This graphic shows the average working hours between higher and lower-income groups in America, based on income percentile.

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Average working hours in America

The Actual Working Hours of Different Income Levels

Do you really need to work 100-hour weeks for success?

In 2021, America’s top 10% of income earners made at least $129,181 a year—more than double the average individual income across the country.

When looking at differences between income groups, there are many preconceived notions about the work involved. But what are the actual average working hours for different income groups?

This graphic by Ruben Berge Mathisen uses the latest U.S. Census data to show the average working hours of Americans at different income levels.

Comparing Average Work Weeks

The data used for this graphic comes from the U.S. Census Bureau’s May 2022 Current Population Survey, which surveys more than 8,000 Americans from various socioeconomic backgrounds.

Importantly, the data reflects the average work hours that respondents in each income percentile “actually” work each week, and not what’s on their contract. This also includes overtime, other jobs, or side gigs.

According to the survey data, America’s top 10% income percentile works 4.4 hours more each week than those in the bottom 10%. And in surveys across other countries, though with hundreds of respondents instead of thousands, the discrepancy was similar:

While both income and wealth gaps are generally widening globally, it’s interesting to see that higher earners aren’t necessarily working more hours to achieve their increasingly larger salaries.

In fact, the top 10% in the 27 countries shown in the graphic are actually working around 1 hour less each week than the bottom 10%, at least among full-time workers.

Zooming Out: Average Working Hours per Country

Similarities arise when comparing average working hours across different countries. For starters, people living in poorer countries typically work longer hours.

According to Our World in Data, the average worker in Cambodia works about 9.4 hours a day, while in Switzerland, people work an average of 6 hours a day.

While many factors contribute to this discrepancy in working hours, one large factor cited is tech innovation, or things like physical machines, processes, and systems that make work more efficient and productive. This allows wealthier countries (and industries) to increase their output without putting in as many hours.

For example, from 1948 to 2011, farm production per hour in the U.S. became 16x more productive, thanks to innovations like improved machinery, better fertilizers, and more efficient land management systems.

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