Economic Lobbying, Singaporean Style

It’s time to get productive… reproductive

Well it’s not your average public policy lobbying. In fact the breath mint manufacturer ‘Mentos’ bypassed the Singaporean Government and went direct to the people with their novel National Day (August 9) Campaign putting forth the obvious solution to the country’s appallingly low birth rate: it’s time to procreate, if not for yourselves then as a patriotic act for your country. And how better to get the message out there then through song, well rap to be exact.

Now before all the teenage boys out there pass out from excitement there is a pretty restrictive caveat  attached to the call to do what they do on the discovery channel. Mentos clearly states that the ad is aimed at “financially secure adults in stable, committed long-term relationships”[1], which is no small qualification in a country where “44.2 per cent of men and 31 per cent of women between the ages of 30 and 34 in Singapore are still single.”[2]

The above graph[3] shows that Singaporeans perform poorly, no pun intended, when it comes to having children. In fact the UN data on fertility rates as of 2010 places Singapore (1.25) with the fourth lowest fertility rate in the world  behind Bosnia/Herzegovina (1.18), Macao (1.02), and Hong Kong (0.99) which can’t even manage to replace even one of its citizens.

As a budding economist I cannot help but ask myself, why it is that Singapore has lower birth rates?  Just by looking at the list of countries with the four lowest birth rates it is immediately obvious that three of them, Singapore, Hong Kong, and Macao, have something in common. All three used to be colonial outposts to European powers, Singapore and Hong Kong belonging to the British Empire, and Macao to the  Portuguese Empire.

Why might this fact have an impact on fertility rates in Singapore, Hong Kong and Macao?

It doesn’t directly, except perhaps to the extent that the legal and political institutions left behind, by Britain in particular,  may have made a significant contribution towards the economic growth that caused these three places to become developed economies and therefore, like other developed economies, to have low fertility rates.

But this still doesn’t answer the question why Singapore, Hong Kong and Macao have lower fertility rates then other developed countries!

What may go some way to answering this question is the fact that as Colonial outposts on the edge of China, Hong Kong and Macao were necessarily restricted in geographical size, a characteristic obviously shared by the island State of Singapore.

Here comes the economics… The decision to have children is largely dependent, in developed countries at least, on the amount of resources that a parent must forego over the course of their child’s lifetime which they could otherwise spend on themselves (the ‘opportunity cost’ of having children). One of the bigger costs incurred in raising a child, along with education, food, clothing, etc, is housing. Couples suddenly need more space in which to house their family as it expands (unless they choose to all live in one room which is unlikely in a developed country).

When it comes to real estate, any restriction on physical space available means that as population grows the demand for any given location is constantly increasing, raising prices of real estate constantly. Furthermore, as housing becomes denser, the added complexity of building taller buildings increases construction costs which necessarily flows through to the cost of housing.

Therefore, on average, the opportunity cost of housing children in Singapore, and similarly Macao and Hong Kong, is relatively higher than having a child in many other developed countries. Could this be a major factor as to why Singapore has such a low fertility rate?

If so, patriotic fervour induced by a song is unlikely to create much of a difference in the birth rate nine months from August 9^th. Personally, I won’t be holding my breath for a massive spike in Singapore’s birth rate approximately nine months from now. However, I will acknowledge that there could be a small increase if couples who were planning to conceive in the couple of months following August were convinced to bring their baby plans forward slightly. However, if that were the case then the increase would be cancelled out by a roughly equal decrease in the birth rate in the following period.

Will this campaign be successful?  No doubt statisticians will be looking to see if there is a statistically significant birth rate spike in nine months time. I will be very curious to see what they come up with.

Important Qualification From The Author:

NB: All of the above points were based on my personal knowledge and intuitive guesswork, due to a heavy workload this semester I have not done any research into this area to test the extent to which geographical limitations have a significant causal relationship on low birth rates in Singapore, Macao, or Hong Kong. Furthermore I in no way intend to imply that this is anything more than a plausible explanation, that may or may not coexist with a whole host of other factors that contribute to low birth rates in these countries.