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

The World Population Pyramid (1950-2100)

The world is in the midst of a notable demographic transition. Here’s how the world population pyramid will change as we close in on the year 2100.

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The world is in the midst of a notable period of demographic transition.

Back in the 1960s, global population growth peaked at a 2.1% annual rate, but since then it has been on a historic downtrend.

In fact, according to the most commonly cited United Nations projection, which is based on a medium fertility rate scenario, it’s expected that annual population growth could drop all the way to 0.1% by the end of the 21st century.

Visualizing a Demographic Transition

Today’s powerful charts come from Our World in Data by economist Max Roser, and they show how global demographics will shift over the next 80 years.

Below you can see one major catalyst of this change, which is the peaking (and then falling) population growth rate:

Growth in world population from 1950 to 2100

Why has population growth been dropping since the 1960s?

A variety of explanations factor into this, including:

  • Falling fertility rates:
    Birth rates tend to fall as nations get richer. First, this happened in the developed world, but as the century progresses this phenomenon will impact more and more developing nations.
  • Government policy:
    China’s “One Child Policy” in particular had an effect on global population growth, and the aftermath of the policy is still contributing to a shrinking Chinese population over the long term.
  • Rural flight
    Urban dwellers tend to have fewer babies—and by 2050, there will be an additional 2.5 billion people living in cities globally.

Fewer births combined with improving healthcare—especially in developing nations—will dramatically alter the composition of the world population pyramid, creating both economic opportunities and challenges in the process.

The Changing World Population Pyramid

The following graphic charts how these changes affect the makeup of the world’s population.

World Population Pyramid transition

Over time, the shape of the world population pyramid is expected to shift from Stage 1 (high birth rates, high death rates) to something closer to Stage 4 (low birth rates, low death rates).

As the population distribution skews older, here is how population size and global median age will change:

YearGlobal Population SizeMedian Age
19502.6 billion23.6 years
20187.6 billion30.0 years
2050p9.7 billion36.1 years
2075p10.7 billion39.0 years
2100p11.2 billion41.6 years

Global median age is projected to surpass 40 years by the end of the century, and it will be considerably higher in many Western nations, especially in Japan and Europe.

With the future demographic composition looking very different than today, it will be fascinating to see how the economy responds to these potential tailwinds. Further, it will be even more interesting to see what role automation will play as the old-age dependency ratio hits historic highs.

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Demographics

Population Boom: Charting How We Got to Nearly 8 Billion People

In the next year or so, humanity is expected to pass the 8 billion person milestone. These charts and maps put global population growth into context.

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Today, the global population is estimated to sit at 7.91 billion people.

By the end of 2022 or within the first months of 2023, that number is expected to officially cross the 8 billion mark. Incredibly, each new billion people has come faster than the previous—it was roughly only a decade ago that we crossed the 7 billion threshold.

How did we get here, and what has global population growth looked like historically?

In this series of six charts from Our World in Data, we’ll break down how the global population got to its current point, as well as some big picture trends behind the data.

#1: Mapping the Population Over 5,000 Years

New York, São Paulo, and Jakarta were not always bustling metropolises. In fact, for long parts of the history of civilization, it was unusual to find humans congregating in many of the present-day city locations we now think of as population centers.

The human population has always moved around, seeking out new opportunity and freedoms.

5,000 years of population movement

As of 3,000 BC, humans could be mainly found in Central America, the Mediterranean, the Fertile Crescent, and parts of India, Japan, and China. It’s no coincidence that that agriculture was independently discovered in many of these same places during the Neolithic Revolution.

#2: The Hockey Stick Curve

For even more context, let’s zoom way out by using a timeline that goes back to when woolly mammoths still roamed the Earth:

Annual World Population since 10,000 BC

From this 10,000-foot view, it’s clear that human population growth started going exponential around the time of the Second Agricultural Revolution, which started in the 17th century in Britain. This is when new technologies and farming conventions took root, making it possible to grow the food supply at an unprecedented pace.

Soon these discoveries spread around the world, enabling population booms everywhere.

#3: The Time to Add 1 Billion

The data and projections in this chart are a few years old, but the concept remains the same:

Time to Add 1 Billion in Population

It took all of human history until 1803 to reach the first billion in population. The next billion took 124 years, and the next 33 years. More recent billions have come every dozen or so.

So why then, are future billion people additions projected to take longer and longer to achieve?

#4: The Growth Rate is Shrinking

Because of demographics and falling fertility rates, the growth rate of the global population has actually been on a downward trend for some time.

Falling Population Growth Rate

As this growth rate gets closer to zero, the population curve has become less exponential like we saw in the first graphs. Population growth is leveling out, and it may even go negative at some point in the future.

#5: The Regional Breakdown

Although the rate of population growth is expected to slow down, there are still parts of the world that are adding new people fast, as you can see on this interactive regional breakdown:

Since 1973, Asia has doubled its population from 2.3 billion to 4.6 billion people.

Comparatively, over the same time frame, Europe has gone from 670 million to 748 million, equal to just an 11% increase.

#6: The Present and Future of Population Growth

Population projections by groups like the United Nations see the global population peaking at around 10.9 billion people in 2100.

World Population 1700 to 2100

That said, there isn’t a consensus around this peak.

Organizations like the Institute for Health Metrics and Evaluation (IHME) have a different perspective, and they have recently modeled that the global population will top out at 9.7 billion people by the year 2064.

As we climb to surpass the 8 billion mark in the coming months, it will be interesting to see what path humanity ends up following.

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