Japan’s Population Now So Old That Sales Of Adult Diapers Exceed Those For Babies

As we noted in 2009, Japan has an incredibly old population … which will put an increasingly heavy  burden on the economy:

Franco Modigliani won the Nobel Prize in Economics 1985, partly for his “life cycle hypothesis“, which states that spending and savings patterns are predictable and largely a function of age demographics. In other words, Modigliani’s hypothesis is basically that age demographics largely determine the health and robustness of an economy.

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Specifically … the basic health of any country’s economy is largely driven by the number of its citizens who are in their peak spending years.

For example, the peak Japanese spending range has been estimated to be comprised of 39-43 year olds. The more 39-43 year olds Japan has at any given time, the more consumer spending there will be, as these are the folks who are the big spenders in Japan. Dent argues that the Japanese economy will tend to grow when the number of 39-43 year olds grows, and to shrink when it shrinks.

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Countries with a large percentage of elderly people and a small proportion of productive workers will have less productive output and a larger demand for social services than those with a higher percentage of workers. It should also be obvious that this will tend to drag down the economy.

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Japan has the worst demographics of all, with a staggering percentage of elderly who need to be taken care of by the young:

Chart 2: Old Age Dependency Ratios for Selected Countries

clip image0025 thumb Japans Population Now So Old That Sales Of Adult Diapers Exceed Those For BabiesSource: http://data.un.org/

Business Week gives an update:

Last year, for the first time, sales of adult diapers in Japan exceeded those for babies.

Given its quickly-aging population, Japan will have a hard time competing with younger countries like China, Brazil or India.

Here’s China:

ch all2 Japans Population Now So Old That Sales Of Adult Diapers Exceed Those For Babies

Brazil has a much younger age demographic.

And India’s is even younger than Brazil’s.

Category: Economy, Think Tank

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3 Responses to “Japan: The Old Weigh On the Young and the Economy”

  1. Conan says:

    Economic growth has traditionally been attributed to increases in population, accumulation of capital, and increased productivity. Japan has done a good job at productivity of the worker. They have done good at accumulation of capital by having trade surpluses, unfortunately this has been somewhat cancelled out by having a dept to GDP ratio of over 200%

    Another factor to consider is as society moves from a rural population to an urban one the birth rate noticeably is reduced. Japan has some of the densest urban areas in the world. Thus some of the efficiency gains of urbanization is cancelled out by the reduction of population.

    An educated / skilled population that is growing at a reasonable rate is one of the best things a country can have. Of the OCED countries the USA stands out in this respect when you take the whole picture and one of the big reasons for this is immigration. We are open, Japan is closed.

  2. Greg0658 says:

    ‘ An educated / skilled population that is growing at a reasonable rate is one of the best things a country can have. ‘ *

    thats true* .. but but – I just don’t believe that’s true in the 21st and beyond – but but what do I know – that’s what makes a market – and extinctions of huge bodies

    I guess ‘ reasonable ‘ is the key word .. but you speak like an invasive species capitalist – where growth is absolutely required for expansion of said activities*

    * housing, business space, cars, roads, utility distribution, energies & food ( ‘ best things ‘ )
    ( no picking a fight – I know I know)

    now I think its beer time – Mike & I have this running joke – we talk at each other across the bar – have this hand movement – goes over our head – with a “zooooom” sound

  3. ricecake says:

    The U.S seems trending the same direction too. Noticeably in any drug stores such as CVC, the sections that sell geriatric care stuffs including diapers are growing bigger and bigger each year and they look bigger than the sections of baby stuffs including diaper. If the Geriatric Department is not bigger it’s at least the same size as the Baby Department.