Relook population replacement rate, says expert

By Andrea Ong, The Straits Times, 14 Feb 2013

LIKE many countries, Singapore may be looking at its population figures through outdated lenses, an Austrian expert on demography said yesterday.

Professor Wolfgang Lutz is calling for nations to set aside 2.1 as the desired population replacement rate and look instead at their changing conditions.

For instance, he calculates that Singapore's optimal fertility in the long run should be about 1.7.

Prof Lutz also advocates new methods of calculating fertility and dependency ratios, which take into account factors such as the rising education levels, lower mortality rates and immigration.

Prof Lutz, the founding director of the Wittgenstein Centre for Demography and Global Human Capital in Vienna, was speaking at a seminar organised by the National University of Singapore's Faculty of Arts and Social Sciences. The centre was founded two years ago as a collaboration among three academic institutes.

One assumption he cited that needs a relook is the 2.1 replacement rate in developed countries.

He said it was a "highly artificial number" churned out by a mathematical demographic model for very long-term conditions, which assumes no changes in life expectancy and migration.

The 2.1 figure does not take into account the rapidly increasing life expectancy and migration rates in developed countries such as Singapore, Western European nations and America, said Prof Lutz, the first social scientist to win the Wittgenstein Award, Austria's top prize for science.

His comments came just days after Parliament debated the Population White Paper that looked at the impact of a shrinking and ageing population.

Prof Lutz also disagreed with the conventional calculation of the old age support ratio - the number of working-age citizens per elderly dependant. Singapore's citizen old age support ratio in 2010 was 6.4. The figure is expected to drop to 2.1 by 2030.

He said the formula fails to take into account countries' rising education levels. Studies show higher education tends to result in a more productive workforce, which stays healthier and works for a longer period, he added.

He proposes a new method of calculating the ratio which redefines elderly dependants as those who are less than 15 years away from their life expectancy.

Prof Lutz is also proposing an overall "education-weighted dependency ratio" which assigns different weightage to factors like education costs and the longer productivity in a person's lifetime.

Applying this ratio to Singapore, he calculates that Singapore's optimal fertility is 1.7.

He said that for most developed countries, the figure ranges from 1.6 to 1.9. "You have fewer children but you can invest more per child - and that will more than compensate the smaller size of this cohort," he added.

Immigration could make up for part of the fertility shortfall but a country is likely to have a smaller population eventually.

Based on the 1.7 projection, Singapore's current estimated Total Fertility Rate (TFR) of between 1.28 and 1.3 is not yet cause for concern, he said. Citing data from European countries, Prof Lutz said TFR does not capture the fact that women now tend to have children later in life. He reckons Singaporean women may in fact have 1.5 children over their lifetime, not 1.29, as the TFR suggests.

The Population White Paper calls for maintaining a Singaporean core while topping up the population with immigration.

Asked for his thoughts on immigration, Prof Lutz said increasing each person's well-being - measured by income per head - is "not directly related to the increasing size of the population".

"Many of the positive economic benefits of a bigger market can be realised through open borders and free-trade agreements," he said, citing the European Union as an example.

But Prof Lutz, who has read the White Paper and was involved in a similar citizens' dialogue on population in Germany, said such exercises are important in stimulating public discussions.

"Our societies need these kinds of public discussions... because this is something that every citizen can contribute to and that touches our lives."

PROF LUTZ'S CONCLUSIONS

Total Fertility Rate (TFR)

- Conventional definition: The average number of children born to each woman if she bears children according to the fertility rate for her age in that year.

- What Prof Lutz (right) says: Capturing a woman's TFR in a particular year ignores her potential to have more children later in life.

His research shows that in societies where women delay childbearing, their TFR is lower than the number of children they actually have in their lifetime. Hence, in such societies, a period of steep population decline is usually followed by an uptick, which is not due to government policies but to the effect of the delay.

He has developed a formula for fertility rates that takes into account this potential for more children.

Old Age Support Ratio

- Conventional definition: The number of working-age people aged 20 to 64 per elderly person aged 65 years and older.

- What Prof Lutz says: As a country's population becomes more educated, life expectancy goes up. People are healthier and can work for more years. So, the "threshold" of old age should be flexible. He suggests that people are old when the average remaining life expectancy of their age group is less than 15 years away. They are supported by those aged 20 up to this threshold, instead of age 64 as is done now.

Related

Clarifications to Professor Lutz’s Proposal