Quote of the Day: April 17, 2012
All Over the World People Are Waiting with Baited Bated Breath for the Tenth Anniversary of Duncan Black's Eschaton Weblog...

Ask the Mineshaft: Is This too Hard a Problem for the Econ 1 Final?

Long-Run Growth: In 8300 BC there were roughly 5 million people in the world—with an average standard of living of about $500/year. In 1700 there were roughly 640 million people in the world—with an average standard of living of about $500/year. This problem explores how this came about.

  1. What was the average population growth rate between 8300 BC and 1700? Use the Rule of 72 to calculate your answer.

  2. What was the average rate of growth of global real GDP between 8300 BC and 1700?

  3. The growth rate of global real GDP is equal to 2/3 times the growth rate of population plus 1 1/2 times the growth rate of total factor productivity. What was the average total factor productivity growth rate between 8300 BC and 1700?

  4. Suppose that, in a preindustrial society, the population growth rate in percent per year is equal to (1/167) times the difference between the average standard of living and the Malthusian “subsistence” level. Calculate the average subsistence level of the standard of living between 8300 BC and 1700.

  5. (Triple credit) Thomas Robert Malthus famously--or infamously--argued in the 1790s in his Essay on the Principle of Population that the best way to create a healthy, prosperous, and good society was to reinforce monarchy, theocracy, and patriarchy in order to postpone the average age of marriage and sexual activity and so raise the Malthusian “subsistence” level of the standard of living. Suppose that such a policy of High Traditionalism succeeds in halving fertility—in turning a society that would otherwise be doubling in population in a 24-year generation into one with zero population growth. What would the average standard of living have been over 7300 BC to 1700 AD if societies had been organized as Malthus wished?

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