Agricultural Economics 262: Study Notes
SECTION 2.1: Demand Side - Population Growth and Income Effects on Food
Consumption
Key Determinants of Resource Demand
• Population size
• Population growth rate
• Consumption per capita
Pre-Industrial Revolution vs Post-Industrial Revolution
Before Industrial Revolution (when world was "poor"):
• Growth in food demand = proportional to population growth
• 10% population growth = 10% increase in food demand
• Consumption per capita roughly same for all people (more equitable world)
After Industrial Revolution (1760-1840):
• Increased inequality: some became richer, others remained/became poorer
• Higher income → increased consumption per capita AND different consumption
patterns
• Rich vs poor consumption differences significantly impacted total resource
demand
Malthusian Theory and Its Problems
Thomas Malthus (1766) predicted:
• Population grows exponentially until
resources overexploited
• Chaos follows when population growth
constrained by food availability
• Population declines until demand
balances supply
,Malthus's flaws:
• Overly simplistic view of human behavior
• Assumed agricultural production increases linearly
New-Malthusian Model (Club of Rome, 1970s):
• Also projected serious shortages
• Emphasized depletion of stock resources
• Ignored stimulating effect of rising prices on innovation and exploration
What Actually Happened Since Mid-1970s
• Agricultural productivity outpaced population growth
• Better nutrition → better health → increased life expectancy
• Higher income → lower population growth
• All conflicted with Malthus, leading to what we call "demographic transition"
Demographic Transition to Stable Population
Definition: FROM smaller, younger population TO bigger, older population
Population dynamics:
• Birth rate > death rate = population grows
• Birth rate < death rate = population contracts/decline
• Birth rate = death rate = stable population (replacement rate ≈ 2.1 children per
woman)
Quote: "Rapid population growth commenced not because humans suddenly started
breeding like rabbits, but rather because they stopped dying like flies" (Nicholas
Eberstadt, 1995)
Seven Steps of Demographic Transition (stopped dying like flies)- Mathusian chaos
1. Better nutrition (due to agricultural productivity/innovation)
2. Better nutrition → better health
3. Better health → longer life expectancy
4. Longer life expectancy → higher education (more time to learn)
5. Higher education → higher income
6. Higher income → lower birth rate
7. Lower birth rate → population stabilization
, [ Demographic Transition - Birth/Death Rates Over Time]
Demographic Transition Process (This tempo of this transition differs across
countries)
• Death rate (CDR) decreases first due to better health
• Birth rate (CBR) remains high initially
• Population keeps increasing for 15-20 years
• Birth rate decreases later due to: improved women's health, higher living
standards, higher education, more employment, reliable contraception, women
realizing fewer children serve personal interests better
• Age profile changes to larger but older population
Implications of Demographic Transition
Population changes:
• As population stabilizes, % elderly increases (larger total population & larger
proportion older people)
SECTION 2.1: Demand Side - Population Growth and Income Effects on Food
Consumption
Key Determinants of Resource Demand
• Population size
• Population growth rate
• Consumption per capita
Pre-Industrial Revolution vs Post-Industrial Revolution
Before Industrial Revolution (when world was "poor"):
• Growth in food demand = proportional to population growth
• 10% population growth = 10% increase in food demand
• Consumption per capita roughly same for all people (more equitable world)
After Industrial Revolution (1760-1840):
• Increased inequality: some became richer, others remained/became poorer
• Higher income → increased consumption per capita AND different consumption
patterns
• Rich vs poor consumption differences significantly impacted total resource
demand
Malthusian Theory and Its Problems
Thomas Malthus (1766) predicted:
• Population grows exponentially until
resources overexploited
• Chaos follows when population growth
constrained by food availability
• Population declines until demand
balances supply
,Malthus's flaws:
• Overly simplistic view of human behavior
• Assumed agricultural production increases linearly
New-Malthusian Model (Club of Rome, 1970s):
• Also projected serious shortages
• Emphasized depletion of stock resources
• Ignored stimulating effect of rising prices on innovation and exploration
What Actually Happened Since Mid-1970s
• Agricultural productivity outpaced population growth
• Better nutrition → better health → increased life expectancy
• Higher income → lower population growth
• All conflicted with Malthus, leading to what we call "demographic transition"
Demographic Transition to Stable Population
Definition: FROM smaller, younger population TO bigger, older population
Population dynamics:
• Birth rate > death rate = population grows
• Birth rate < death rate = population contracts/decline
• Birth rate = death rate = stable population (replacement rate ≈ 2.1 children per
woman)
Quote: "Rapid population growth commenced not because humans suddenly started
breeding like rabbits, but rather because they stopped dying like flies" (Nicholas
Eberstadt, 1995)
Seven Steps of Demographic Transition (stopped dying like flies)- Mathusian chaos
1. Better nutrition (due to agricultural productivity/innovation)
2. Better nutrition → better health
3. Better health → longer life expectancy
4. Longer life expectancy → higher education (more time to learn)
5. Higher education → higher income
6. Higher income → lower birth rate
7. Lower birth rate → population stabilization
, [ Demographic Transition - Birth/Death Rates Over Time]
Demographic Transition Process (This tempo of this transition differs across
countries)
• Death rate (CDR) decreases first due to better health
• Birth rate (CBR) remains high initially
• Population keeps increasing for 15-20 years
• Birth rate decreases later due to: improved women's health, higher living
standards, higher education, more employment, reliable contraception, women
realizing fewer children serve personal interests better
• Age profile changes to larger but older population
Implications of Demographic Transition
Population changes:
• As population stabilizes, % elderly increases (larger total population & larger
proportion older people)
