On aggregative economic models and population policy

Abstract

The aim of this paper is to set out the requirements of a theory of optimal economic--demographic growth. There are three sections. The first is a discussion of the ethical assumptions that necessarily underlie the choice of an index of social welfare in a policy model. Economic optimization theory can and usually does take as self-evident what should be maximized. When the size of population is assumed to be influenced by policy decisions, however, the ethical bases of policy come to the forefront.The second section provides a categorization of aggregative economic-demographic models, and identifies some likely directions of advance in this presently underdeveloped field. Most of the existing literature derives from (and shares the weaknesses of) optimal capital accumulation theory, with an inordinate concern for golden ages and Pontryagin's Maximum Principle. In an appendix, the author adds a model of his own in the same tradition.The final part of the paper explores the interconnections between abstract policy models and the actual decisions that policymakers are confronted with (or make implicitly), issues discussed include the inherent strengths and limitations of policy models, and the extent to which it is useful to analyze population policy separately from "social policy at large".