South Korea's low fertility problem cannot be solved by throwing money at it
We actually know that billion(aire)s don't make much of a difference.
The decline in fertility in developed countries is not a new phenomenon; it’s been a consistent trend for decades. Most rich countries and a few middle-income countries have reached fertility rates below the replacement level of 2.1 children per woman, which is the level needed to keep a population stable, not growing nor declining.
This is usually not a concern for countries with a fertility rate slightly below the replacement level, like France, which has maintained a fertility rate of approximately 1.7 - 1.8 children per woman in recent years. That fertility rate means France’s population may decrease slightly during the next few decades, barring immigration. However, it’s a serious concern for South Korea, which currently holds the world's lowest fertility rate at 0.72 children per woman.
If this rate remains constant, South Korea's population could halve before the end of the century1.
There are numerous reasons cited to explain this very low fertility rate: the financial cost of raising children, economic pressures, housing and education costs, and women’s concern with their careers. Given most of those reasons are of an economic nature, it’s not surprising that the South Korean government has chosen to address the issue through economic measures, spending more than 200 billion in the past 16 years towards that end.
Being the skeptic that I am, I decided to check the validity of those economic arguments in explaining low fertility by focusing on a particular group of people who are not financially stressed, don’t worry about the cost of raising an additional child, and don’t have problems affording housing and education for as many children as they desire: billionaires.
For this analysis I’ll focus on South Korean, French and German billionaires. France has a somewhat high fertility rate for a wealthy country, which makes the comparison with South Korean billionaires interesting, while also boasting a large number of billionaires. Germany, on the other hand, has a fertility rate of 1.5 children per woman, falling between South Korea and France2.
The samples
I established the following rules in order to select a good sample of billionaires.
All living individuals listed as billionaires in the respective Wikipedia entries for each of the three countries are considered for inclusion.
Many billionaires place a high value on their privacy for understandable reasons, so those for whom no information on the number of children could be found were not included in the sample3.
Didn’t include anyone bellow the age of 43 because younger people have probably not reached their completed fertility4.
Didn’t include billionaires who hold the nationality of a country yet have spent the majority of their lives, particularly their formative years, outside that country5. The sample is supposed to be a good representation of the general population of the country in terms of culture.
Did not include widowers of billionaires, but did include children of billionaires even if they themselves do not appear in a billionaire’s list.
I also included billionaire families, whose individual members do not necessarily meet the billionaire threshold on their own. These are families (meaning siblings, cousins) who collectively own billions (e.g. the Hériard-Dubreuil family, majority owners of Rémy Cointreau group, valued at more than 9 billion euros).
The purpose of including close family of billionaires and billionaire families is to have a larger sample of very rich people, especially people under 70 years old, who were raised in the same families as billionaires and experienced the same absence of economic hardship. Billionaires tend to be old for obvious reasons, and I wanted to have as many younger people on the sample as possible.
Also, billionaire families include individuals whose net worth is not billions, but only hundreds of millions. They are in the same category as billionaires from the point of view of not having economic constraints when deciding to have children. Yet, because they belong to very prominent families that have preserved their wealth for more than one generation, public information on these individuals is more accessible than on other individuals with hundreds of millions of dollars/euros6. This enabled me to enlarge my sample.
The results
The next chart compares the fertility rates for the general population against the rates for billionaires under the age of 70 in each of the three countries.
The chart reveals some clear patterns.
In all three countries, the general population rate is considerably lower than the billionaire’s rate. The gap ranges from 1.11 in France to 1.32 in South Korea.
The fertility rates of billionaires and the general population follow the same order across the countries. France is highest, South Korea is lowest, with Germany in the middle.
The gaps between Korean billionaires and German/French billionaires, and between the South Korean general population and the French/German population are very similar. This is especially true when comparing Germany and South Korea.
This first point supports the economic arguments for low fertility: billionaires have a significantly higher fertility than the general population in all three countries.
But the third point is the most interesting one in order to understand South Korea’s situation. Korean billionaires have a significantly lower fertility than their French and German peers.
The values of the fertility gaps between South Korean billionaires and French or German billionaires are 0.71 and 0.62 respectively. Those same values for the general population are 0.92 and 0.64, a wider but similar range.
This suggests the existence of a factor, specific to South Korea, a non-economic issue that lowers fertility for both Korean billionaires and the general population.
I should mention that I used a six-year TFR average7 as the fertility rate for each country. Using this average provides a good estimate of the expected number of children for individuals who have recently completed their reproductive years. In fact, if I had used a broader year range the effect would have been a slightly higher Korean general population fertility rate, but a narrower gap between that rate and Germany’s and France’s rate.
In order to make that TFR average comparable to the billionaire’s fertility rate, I considered only billionaires between 43 and 69 years of age, an age bracket close to the one the TFR average is estimating. The next chart shows the decline in fertility when comparing this group to billionaires aged 70 and above.
As you can see in the graph, in Germany and South Korea older billionaires have higher fertility rates, and South Korea shows the largest decline in its billionaire fertility rate. This points again to the existence of a non-economic factor lowering the fertility of all South Koreans.
I don’t want to speculate on what that non-economic factor is. At least not on this post. My goal with this post is to show that economic factors are not the only important ones producing the current collapse of fertility in much of the world.
In the case of South Korea, I think any amount they spend to try to increase fertility will probably be wasted money and have very little effect. And with more and more countries joining the very low fertility group, it might be wise for their governments to think twice before spending billions to little effect.
Disclaimer: I found out much more about the rich and famous than I ever wanted to know while researching this, but since I’m a very private person and I don’t like sticking my nose in the lives of others I’ve decided to forget each and every personal detail about the lives of these billionaires. Seriously. I’m very good at forgetting things so I expect not to remember anything about any scandals, inheritance fights, and all the other stuff in a few weeks. Maybe a few months.
A rough, back-of-the-envelope calculation suggests maybe just 40-50 years from now.
Ideally, I would have preferred to use a third country with a fertility rate of 1.2 or 1.3, instead of Germany’s 1.5 rate. But selecting countries with a larger number of billionaires makes it easier to get a good sample for each of them. If time permits, I may add Italian, Japanese, or Spanish billionaires into this analysis.
The procedure for finding out number of children was: first look at Wikipedia pages, then forbes.com, then a quick Duckduckgo search for relevant interviews or articles which might mention the number of children.
Some individuals may have more children in the future, and that would mean I’m underestimating their fertility compared to the real general population fertility by a small amount (https://www.cdc.gov/nchs/data/statab/natfinal2002.annvol1_23.pdf). However, it doesn’t have an effect when comparing between countries.
A non exhaustive list: The three Saadé siblings who were not born in France (4, 2, 1 children); Mohed Altrad (75 yo) who was not born in France (5 children); Pierre Omidyar who migrated from France as a child. Peter Thiel who migrated from Germany when he was one year old.
Think of current Rothschild family members who might not have such a large net worth, after many generations of inheritances being partitioned, but are still very prominent due to being Rothschilds and due to often being the children or grandchildren of other prominent members of society.
TFR stands for Total Fertility Rate. It’s an estimate of the total number of children that an average woman will give birth during her entire lifetime, based on the number of births of a given year. The fact that it’s calculated for a given annually means it is too sensitive to short-term fluctuations in birth rates.
I'm curious what the difference is in the number of hours worked for a Korean billionaire vs the average Korean worker. Obviously they don't have to work if they don't want to, but they may still feel compelled to at least make a show of keeping up with Korea's intense work culture.