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Follow Up to Iran Now Has a Lower Birthrate Than France

In February, I wrote a piece that noted that Iran now has a lower birthrate than France. I had ascribed Iran’s plunging birthrate to rising educational standards for women. Kudos to @LTommy256 for pointing out another major contributor: chlamydia!


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Iran Now Has a Lower Birthrate Than France: Here’s the Takeaway

Here’s a little fact that will blow your mind. In Iran, you can get married for an hour and then divorced, no strings attached. It’s the sigheh, or “temporary marriage” (sometimes called the “pleasure marriage.”)

In a sigheh arrangement, the duration of the marriage and the dowry are specified in advance, and once the time period elapses, be it an hour or a year, both parties are free to go their separate ways.

I couldn’t make this stuff up if I wanted to. In theocratic, hardline Iran, there is a religiously-sanctioned hookup culture.

Based on shifting demographic trends in Iran, it appears that Iranians have gotten a little too comfortable with temporary marriage and have decided to forgo the traditional kind.

Last week, I wrote about China’s pending mother shortage and what it means for China’s economy in the decades ahead. Along those same lines, today I’m going to turn a popular misconception about Iran on its head.

There is a widespread belief in the West that we’re being “outbred”  by unstable countries that are hotbeds for terrorism, particularly in the Islamic world. To an extent, this is true. The average woman in Afghanistan, Iraq and Yemen, to pick three high-profile examples, can expect to have 5.1, 4.1 and 4.2 children in their respective lifetimes.

Iran had similarly high birthrates…before the Islamic revolution of 1979.


Ironically, Iran had much higher birthrates before the revolution, when it was officially a western-allied nation and women walked the streets freely with their heads uncovered. But just six years after the mullahs took over, the fertility rate collapsed. By 2005, it had fallen below the population replacement rate.

Today, at 1.9 children per women, the Iranian fertility rate is equal to that of the U.S. and actually lower than that of France!

Iran is changing. Women make up more than 60% of college students. With higher levels of female education, the average age of marriage and first childbirth rises and the smaller the average family size gets.  According to the Alliance Center for Iranian Studies, the average age of marriage today is between 25 and 35 among men, and between 24 and 30 among women.

Divorce has a way of putting the brakes on family size, and about one out of three marriages in Tehran now end in divorce. For better or worse, Iran is starting to look a lot more “Western,” at least when it comes to family life.

What’s the takeaway here?

Iran won’t be a rogue state forever. We probably won’t see real political change while Ayatollah Khamenei, Iran’s supreme leader, is alive and kicking. But he’s also 75 years old and won’t be around forever. Change will come, and a lot sooner than most people realize.

Will the mullahs give up power without a fight? Probably not.  And Iran may never have a full-blown revolution and regime change. But as Iranian society changes, I expect the government to at least subtly tone down its anti-western rants and to start behaving like a “normal” country.

This post first appeared on Economy & Markets.

Charles Lewis Sizemore, CFA, is chief investment officer of the investment firm Sizemore Capital Management and the author of the Sizemore Insights blog

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More Food for Thought on Valentines Day: Love and Sex in Japan

In Economy & Markets last month, Harry Dent had some interesting comments on marriage and family formation in Japan and what it means for the Japanese economy. Here’s an excerpt:

It’s one thing to naturally have fewer kids as a country urbanizes and gets more wealthy. It costs more to raise and educate kids in such a society and so couples naturally choose to have fewer kids and educate them better. Every developed country has seen such trends, as have the urban populations of emerging countries.

But there’s something different in Japan, something downright scary. They not only have one of the lowest average number of children per woman of 1.41 vs. a 2.1 replacement rate, but single and married people increasingly have no interest in sex or romantic relationships…

Here are some key findings:

1. 45% of women and 25% of men 16 to 24 are “not interested in or despised sexual contact.”
2. More than 49% of Japanese citizens are single.
3. 40% of unmarried men and 61% of unmarried women age 18 to 34 are not in any kind of romantic relationship.
4. 23% of women and 27% of men say “they are not interested in any kind of romantic relationship.”
5. 39% of Japanese women and 36% of men of child-bearing age, 18 to 34, have never had sex.
6. Women in their early 20s have a 25% chance of never getting married and a 40% chance of never having kids.

Japanese laws and social customs make it extremely difficult for women to have a career and a family. Women who get pregnant, or even just marry, are generally expected to quit work and become a housewife…

On top of this extraordinarily high lack of interest in sex and having families, the Japanese live longer than any other wealthy country in the world, with a life expectancy of 84 vs. 79 in the U.S. and 80 to 81 in most of Europe.

That means they retire longer and require more support from a dwindling workforce… By 2050, that 48 million workforce will be supporting 37 million elderly aged 65 and over.

If this isn’t economic suicide, or Hara-kiri, I don’t know what is.


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Food for Thought on Valentines Day: Chinese Couples Will Be Making a LOT Fewer Babies

Here’s a little something to think about with Valentine’s Day coming up: Chinese couples will be making a lot fewer babies in the years ahead. And this has major implications for China’s future growth.

A China baby bust might sound counterintuitive to anyone who follows China, as the government announced in 2013 that it would be relaxing the One Child Policy. Most China watchers assumed this would lead to a Chinese baby boom. But this ignores the very large demographic elephant in the room: Babies require mothers. And after three decades of the One Child Policy, China is about to have a major shortage of potential mothers.

Take a look at the chart, which forecasts the population of Chinese women by age bracket using demographic data from the United Nations. China’s population of women of prime childbearing age (25-29) goes into steep decline this year and doesn’t significantly recover…ever.

Chinese Women by Age Cohort

Average age of marriage and first childbirth are rising worldwide, and as a general rule the more developed a country becomes (and the more educated its women become) the higher the age of marriage and first childbirth. So, let’s assume that China’s women, like many Western women, are postponing motherhood until their early 30s. Even then, China has a major problem. Its population of women aged 30-34 goes into steep decline starting in 2020.

Conception is still possible into the late 30s and 40s, of course. But it gets far more difficult and, realistically, it limits family size. You can’t realistically have a large family if you’re getting started in your late 30s. And in any event, the population of women aged 35-39 goes into steep decline ten years from now.

Let’s say that Chinese women, aided with new technology, somehow rewrite the laws of human anatomy and make large families possible into early middle age. Even then, China still has a major problem: the country has evolved with small families as the norm and costs have risen accordingly. Living costs have risen in the cities to the point that large families are not economically viable for the vast majority of Chinese households, and urban apartments are not big enough to accommodate them.

This is a major problem for China and for any Western company that has made large investments in Chinese growth. Children are the future.  You need them to pay the taxes and man the factories of tomorrow. More critically, in the age of modern consumer capitalism, you need them swiping the credit cards and buying the homes of tomorrow. This is particularly critical for China given its government’s stated goal of reorienting its economy away from exports and towards domestic consumption.

Is mass immigration of young women the answer? Well, that sounds good, at least to the red-blooded young men in the room. But the math doesn’t quite work out. China’s population of 20-24-year-old women shrinks by about 30 million over the next ten years. Where, exactly, would China find 30 million blushing brides willing to immigrate? To put that number in perspective, that’s bigger than the entire female population of South Korea, including everyone from newborn baby girls to elderly women.

Let’s just say that Chinese pediatricians are looking at lean times ahead.

This piece first appeared on Economy & Markets.

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This is why Japan will never recover

Here’s a cheery headline to start the week: Japan 2014 births fall to lowest on record but deaths rise.

From the FT:

Deaths outnumbered births in Japan last year by the widest margin on record, underscoring the scale of the challenge facing the government as it tries to ensure a dwindling pool of workers can support growing ranks of pensioners.

The urgency of getting the country’s finances in order was highlighted this week as preliminary figures indicated that Japan’s population fell by a record 268,000 in 2014.

According to the data published by the ministry of health, labour and welfare, births slipped by 2.8 per cent to a low of 1m, while deaths rose fractionally to a high of 1.27m…

If the current nationwide fertility rate of 1.4 stays unchanged, a task force warned in November, then Japan’s population of 127m would drop by almost a third by 2060 and by two-thirds by 2110.

Even if the fertility rate were to rapidly rise to the replacement level of 2.07 by 2030 and then stay there, the population would keep falling for another 50 years before stabilising at a little less than 100m.

I tip my hat to Japanese Prime Minister Shinzo Abe for at least making the effort to shake up Japan’s sluggish economy with his Abenomics reforms. But it won’t matter. Japan will never recover.

Try as he might, Abe can never be Japan’s Reagan or Thatcher. As sick as Britain and America were before the Reagan and Thatcher revolutions, the problems facing both countries were political. A politician with sufficient charisma–Reagan–or cojones–Thatcher–could have fixed them. But you can’t “fix” demographics with politics.

In a modern economy, consumer spending is the dominant contributor to GDP. But consumer spending requires consumers, and Japan has fewer of them every year. And the ones they do have are older and more inclined to save than spend.


China’s Mother Shortage
Shinzo Abe’s Win Doesn’t Mean Much for Japanese Stocks
Japan’s ‘Surprise’ Recession and How You Should Trade It
Japan: Apocalypse Now or Apocalypse Later?
Thinking About Buying Japanese Stocks? Let Me Get You a Duffel Bag, Some Gasoline, and a Lighter

Charles Lewis Sizemore, CFA, is chief investment officer of the investment firm Sizemore Capital Management and the author of the Sizemore Insights blog.

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