Population and Welfare: Measuring Growth When Life Is Worth Living

Economic growth is typically measured in per capita terms. A long tradition in philosophy, however, suggests that social welfare may depend on the number of people as well. To illustrate how much this matters quantitatively, we decompose welfare growth—measured in consumption-equivalent (CE) units—into contributions from rising population and rising per capita consumption. Because of diminishing marginal utility from consumption, population growth is scaled up by a value-of-life factor that empirically averages nearly 3 across countries since 1960. Population increases are therefore a major contributor to growth if one takes a total utilitarian perspective. (JEL E21, E23, I30, J11, O11, O47)