Thursday, November 10, 2011

Physiology and Malthus

The Malthus model of economic growth (or the lack thereof) is now standard fare in undergraduate education. Basically, it shows that there is a limit to the size of an economy that hinges on decreasing returns to labor in production and on mortality increasing as standards of living, as measured by GDP per capita, decrease. Those two critical assumptions are based on observations that were certainly valid at Malthus' times, and are likely to still be true today.

Carl-Johan Dalgaard and Holger Strulik go a little bit further in this theory. As more food is available, people grow taller. But being tall requires more food to sustain the body, which provides an additional reason for stagnation. This makes it more difficult to break loose from this "development trap" and may explain why economies stagnated for so long. But as Malthusian theory, this dies not explain why the economy suddenly exploded in the 19th century.

5 comments:

Mark Bahner said...

Hi,

You write, "The Malthus model of economic growth (or the lack thereof) is now standard fare in undergraduate education. Basically, it shows that there is a limit to the size of an economy that hinges on decreasing returns to labor in production and on mortality increasing as standards of living, as measured by GDP per capita, decrease."

Can you point me to some Internet source that has a discussion of this (I'm too misery to buy an undergraduate textbook)?

In turn, I'll point you to these:

http://longbets.org/194/

http://markbahner.typepad.com/random_thoughts/2005/11/why_economic_gr.html

http://markbahner.typepad.com/random_thoughts/2004/10/3rd_thoughts_on.html

http://markbahner.typepad.com/random_thoughts/2004/09/second_thoughts.html

Suffice it to say, I beg to differ with the Malthus model!

Mark Bahner said...

That should have been "miserly". But I'm too miserable to buy a textbook, also.

Kansan said...

Mark, you are very confused. I population studies, what is called the Malthus growth model is simply exponential growth, which is what Malthus argued would be the path of population if resources were plentiful.

But they are not. In economics the Malthus model describes how the fact that resources are not plentiful, and if fact become scarcer as population increases, and this keeps the population in check. I think every economic growth or development textbook covers this, and many macroeconomics textbooks as well.

Mark Bahner said...

Kansan,

"In economics the Malthus model describes how the fact that resources are not plentiful, and if fact become scarcer as population increases,..."

But it is not a "fact" that resources "become scarcer as the population increases."

It's a theory that is has over 200 years of evidence against it.

Also, the post by Economic Logician states that, "Basically, it (the Malthusian model) shows that there is a limit to the size of an economy that hinges on decreasing returns to labor in production and on mortality increasing as standards of living, as measured by GDP per capita, decrease."

I'd like for him to run the model for the present world economy (approximately 7 billion people, with a per-capita annual GDP of about $11,000 PPP adjusted). What does the model return as the limit of the size of the present world economy?

The reason I ask is because MY model (that per-capita GDP growth rates increase as the number human brain equivalents increase) says that not only does the world GDP not have a limit, but that the world economy will essentially approach infinity even within this century.

Economic Logician said...

Mark, the Malthus model is a model where only the size of population matters. There is no capital accumulation, no technological progress and no improvements in human capital. It does not apply to modern data, and nobody claimed it does.