Pakistan Economic and Social Review

Volume XXXVIII, No. 2 (Winter 2000), pp. 167-192

AN ECONOMIC ANALYSIS OF PAKISTANS INVESTMENT IN POPULATION CONTROL

AMATUL R. CHAUDHARY*
Abstract. This article aims at presenting an economic analysis of Pakistan Governments investment in population control programme during the period 1965-88. This period was selected because of its importance in the history of population control in Pakistan. Economic analysis in die context of this research implies an estimation of economic returns from public expenditure on the governments approved population control measures. A study focused on the calculations of the monitory benefits of averted births for an assessment of economic returns was completed in 1994. A new Averted Births Based (ABB) model was developed for this purpose. The set of assumptions were made largely to escape tricky issues like data inconsistency, and to isolate the influence of socio-economic variables which necessitate controlled experiments and surveys. The study concluded that benefits from population control programme in Pakistan far exceeded the costs.

I. OBJECTIVES
This paper has the following objectives: 1. 2. To access and analyze the Government of Pakistans investment in population control programmes and its economic returns. To collect relevant quantitative data from secondary sources, consolidate and convert this data into specific format for calculating economic returns from population control programme of Pakistan. To develop a sophisticated research tool, i.e. Averted Births Based (ABB) model which could isolate the influence of complex socioeconomic variables to calculate economic returns from a population control programme for a given society.

3.

*The author is Professor of Economics and Dean, Faculty of Arts, University of the Punjab, Lahore-54590 (Pakistan).

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II. INTRODUCTION
Unchecked and rapid population growth has been a major stumbling block in the way of socio-economic development in most of the developing countries. Usually the positive impact of development initiatives is cancelled out due to corresponding increase in the number of individuals added to the society. Unbridled growth in population needs unlimited resources to maintain and improve its living standards. Since, resources are limited therefore we have no option but to control the population to a manageable extent. Investment in population control programmes has been a hotly debated issue in the developing countries for the last five decades. Over the years, international financial institutions have been lending millions of dollars for population control programmes with the assumption that problems of underdevelopment and poverty could be best addressed by decreasing the human fertility. Additionally, population control programmes are perceived to be the best approach to improve reproductive health, reduce the incidence of mother and infant morbidity and mortality. Nevertheless, this is a complex issue. Human fertility behaviour is regulated by socio-economic, cultural, ideological and institutional context of a society. Notwithstanding these theoretical explications, policy planners are more interested to know the economic benefits of investment in population control. Without having exact answer to this question, political establishments in the developing countries may be reluctant to spend their scarce financial resources in this particular area. Additionally, result oriented donor agencies exert pressure on the recipient countries to provide quantitative figures regarding success of the population control programme. The phrase economic return is vague and subject to various subjective interpretations, depending on the conceptual framework and intellectual background of the individual researcher. So the question is what precisely economic returns mean and how are they assessed? There could be various approaches to answer this question. First, population control programme reduces the fertility rate and it would be easy for the society to improve the living standard of manageable number of individuals. However, it is a broad generalization and it is very difficult to pinpoint as to what extent population control programme actually reduces the fertility. Fertility behaviour is not exclusively influenced by population control programmes, but also with countless other variables. Further, decline in birth rate may be due to various socio-cultural

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factors, like migrations, age at marriage, women empowerment, norms regulating breast-feeding and gainful employment of women and their literacy rate. Admittedly, it is not possible to get sophisticated empirical data regarding the influence of all these variables. Second, population control programmes improve the reproductive health by changing the knowledge, attitude and practice and thereby lowering the incidence of mother-child morbidity and mortality. The resultant economic impact would be more savings in the area of health care and disease management. But this method of assessing economic returns cannot accurately depict the contribution of population control programme because change in attitude and use of contraceptives cannot be ascribed merely to the efforts of population control network in the country. Other intermediate variables, e.g. education, audio-visual aids, exposure to western ways of life and the multiplicity of other factors can also be responsible for a change in attitude. So this type of assessment entails various methodological and empirical handicaps. Third, owing to population control programmes, reduced population growth may lead to saving in public expenditure on social overheads like schools, hospitals, housing and transport. Theoretically, the argument is convincing but practically it is also very difficult to concretize the issue: how much society can save from social overhead expenditures by investing on population control programmes? Fourth, averted births due to population control measures may bring monetary benefits like higher per capita income, more capital formation or reduced unemployment. This approach of assessing the returns of population control investment seems more amenable of scientific and mathematical investigation. Therefore, this paper focused on the calculation of monetary benefits of averted births for assessment of economic returns.

III. REVIEW OF LITERATURE

Over the years, social scientists from various disciplines have been trying to demonstrate that investment in population control programmes make good economic sense and ultimately rewarding for the well-being of society. Malthus (1798) warned that society would not be able to feed geometrical addition of individuals as the means of subsistence grow arithmetically. He feared that if unchecked growth was not arrested through planned efforts, population was bound to decrease by the operation of some automatic positive checks (like famine, wars and epidemics). Understandably, every society wants to avoid such positive checks. Reduction of population

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through disease and hunger is universally acknowledged as human catastrophe and therefore should be avoided. Malthus was the first social scientist who linked economic prosperity with population growth. The underlying assumption of his theory was that the society has to incur a cost on the birth and upbringing of a child. If society produces children disproportionate to its resource base, it would be an over taxation on its resources on the one hand and lowering the quality of life of its members on the other hand. Hence, Malthus pleaded that population growth must be based on rational economic calculations. Recently, Lee and Feng (1999) argued that it was Malthus, who for the first time, traced a relationship between industrialized developed countries affluence and their rational demographic behaviour. According to Lee and Feng (1999), Lesser number of children not only encouraged individual savings and discouraged poverty, but also kept the prices of labour high and assured general prosperity. What we today term family planning required a uniquely Western ability to calculate concisely the cost and benefits of having children, and to decide deliberately to delay or abstain marriage. Prosperity, in other words, was a product of Western individualism and Western rationality. Hence, the conclusion is that it is logical to control population to improve the quality of life. Society must invest in population control so that unchecked and ever-increasing numbers of births disproportionate to the resources of society may not convert the society into a hub of underprivileged human beings who live with inadequate facilities of education, health care and civic amenities. However, economic planners need hard facts before allocating budget for increasingly competitive development priorities, i.e. how much monetary benefits society gets if it invests in population control programme. Donors, too, may be interested to know the benefits with some mathematical precision. Given the complexity of the issue, it is challenging to develop a model which could estimate the costs and benefits of investment in population control programme with precision. For the last five decades, various efforts have been made to develop such a model by isolating the influence of intervening variables to measure the return of investment in population control programme. Coale and Hoover (1958) tried to measure the economic benefits from a slower rate of population growth. They constructed an economic model of Indian economic growth. Assuming a given decline in fertility, they calculated its effects on aggregate and per

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capita incomes. Their model assumed that size and quality of the labour force were constant regardless of the fertility. Only monetized investment was considered and constant income was assumed to be spent on welfare to meet the needs of existing population. Evidently, Coale and Hoovers (1958) model neglected the cost of population control programme. Despite limitations, their model set a style and many prominent economists, e.g. Demeny (1961), Enke (1960, 1961, 1962, 1966), Ohlin (1967), Leibenstein (1969), Simon (1969) contributed significantly to the economic consequences of fertility reduction and related issues. Thus Coale and Hoovers analysis proved to be a search light for further explorations in this field. Enke (1957) presented the issue of investment in population control programmes in a different but innovative perspective. His analysis was based on the economic theory that a policy of maximizing per capita income would call for balancing the returns from all forms of investment at the margin. His study was a one-sector model containing a demographic sub-model and attempted direct calculations of the benefits of a prevented birth. Applying a rate of discount of 10%, he showed that since an individual does not begin producing during, at least, the first fifteen years of his/her life, the discounted present value of his/her production is almost zero. But he/she would start consuming as soon as he/she is born. Enke (1957) further refined his calculation by introducing the possibility that money saved from an averted birth may be re-invested which would enhance its value. Despite the fact that Enkes model has all the merits of being precise, predictable and consistent, it suffered two major weaknesses: first, his contention that transfer was simply a monetary operation could not be accepted and second, his idea that per capita income was the sole welfare criterion may also be seriously questioned on valid grounds. Based on Dublin and Lotkas (1945) framework, Meier (1959) developed a model for calculating benefits and cost of family planning programme and arrived at three conclusions. First, the net value of a prevented birth varied directly with per capita income; second, the value of medical innovation which reduced infant mortality would be negative in underdeveloped countries; and third, the economic value of an effective programme of family limitation was much greater for more developed societies. Overall, if one analyzes the merits of Meiers model, it seems more general and has least relevance with the realities in developing countries. In a nutshell, his model had a general applicability to health programme of developed countries.

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Demeny (1965) investigated another relevant and crucial question that if cost and effectiveness of a birth control programme were known, what price would be worth paying for it? In his model, Demeny employed Coale and Hoovers saving function. He assumed that the sole effect of population change was on per capita saving and thus on per capita investment. However, Demenys approach has been criticized as being too narrow in the social and development contexts. It is argued that having a child is not just an economic liability, but an addition of familys productive capacity. A child has various non-economic advantages. Simon (1967) too had almost similar approach to look at the population issue. He estimated the increase in family saving due to fewer children. He also calculated the resulting increase in capital/labour ratio and the final rise in per capita income. Zaidan (1967) refined Enkes model and applied it to measure economic returns of family planning programmes of Egypt. Despite various limitations, this model showed a clear net advantage of reduction in fertility rate in Egypt. Robinson (1968) presented a dynamic macro model to evaluate benefits of a population control programme. His model is unique in allowing only a possible relationship between the rise in per capita income and savings without specifying the direction of change. Simmons (1969) modified earlier models and applied his own model to calculate economic benefits of averted births in India during 1956-67. The benefits thus calculated were about fourteen times the per capita income of the base year. Despite data scarcity problem, some notable studies have been done to analyze the costs and benefits of population control programmes in Pakistan. Khan (1969) calculated the value of preventing a birth due to vasectomy (benefit/cost ratio ranged between 24:1 to 52:1), IUD programme (benefit/cost ratio ranged between 13.4:1 to 27.4:1) and combining the vasectomy and IUD (both gave a minimum of 18:1 and maximum of 38:1 as the benefit cost ratio). Qureshi (1974) attempted to quantify public savings due to Pakistans investment in population control programme. Another notable study was done by Rukanuddin, Soomro and Farooqi (1985). The study was based on data sets generated by the PGE (1962-65) and PFS (1975). It comprised of cross sectional enumeration and a longitudinal registration system of measuring various population related vital events. The researchers used the four techniques of evaluation: (1) standardization approach, (2) component projections, (3) prevalence model, and (4) multivariate Areal analysis, including Path analysis technique which was applied to areal data for measuring the programme impact only on

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fertility by controlling other socio-economic and demographic factors. Despite relative methodological sophistication, the study obviously suffered from data deficiency problems. After having a cursory look at the methods and approaches of the above stated researchers, it can be concluded that models have been improved, revised and enlarged. Nevertheless, all point out the same conclusion that such type of models at their best can be good guess work to assess quantum of costs and benefits of population control programmes. The most important factor is that such models need fairly precise data as their input, which has not been possible in Pakistan.

IV. THE ABB (AVERTED BIRTHS BASED) MODEL

The model interconnects the basic macro economic variables in a causal way. The mathematical form of the definitional and behavioural equations comprising the model is linear. As far as the author knows, the conceptual framework of the model is different from any of the models reviewed in this study or being developed by researchers world-wide. Application of the ABB model to Pakistans population control programme (1965-68) has been attempted. Number of averted births have been calculated each year from 1965 to 1988. The year 1965-66 has been taken as the starting year in this study because government run population control programme had gained momentum by that year. Total money benefits each year due to net averted births which could have been added to the population that year in the absence of any programme of population control, have been calculated. These yearly series of money benefits have been converted in terms of constant price level of 1980-81 which has been assumed to be the base year. Similarly, cost of population control programme has been calculated as sum of the yearly expenditure incurred on population control programme and converted into constant price level of 1980-81. Other types of costs, e.g. opportunity costs or indirect costs have been ignored. SPECIFICATION AND DEFINITION OF VARIABLES A comprehensive definition of costs and benefits was not possible because diverse components such as personal, psychological, ecological and spillovers could not be quantified. So in the ABB model, definition of costs and benefits was by no means precise or comprehensive but conformed to convenience and availability of data. Variables and parameters used in ABB model are given below:

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TABLE 1 Details of Index of Averted Birth

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CALCULATION OF YEARLY BENEFIT/COST RATIOS To discuss the economics of population control, yearly costs and benefits of population control programme in Pakistan have been tabulated in Table 7 above.

V. CONCLUSION
The aim of this study has been to develop a model to quantify economic returns of investment in population control. Data was collected from published sources, consolidated, refined or deflated according to requirements of the model. Benefit cost ratio was calculated which showed that benefits out-weighed costs of investment in population control. This implies that marginal returns are more than marginal costs and so, there is need to expand the programme in order to maximize total welfare of the society. By and large, the objectives of this study were achieved. Conclusion may be summarized as follows: 1. The high returns of investment in population control imply that there is economic justification for further expansion of the programme. A rupee invested in this programme yields fifteen times in terms of constant price level which far exceeds returns from investment in any other physical capital projects. The overall benefit cost ratio calculated in the present study of 1:15 appears to be conservative but still quite near the earlier study by Khan (1968) for Pakistan over a different period and with different methodology which ranged from 1:18 to 1:38. Throughout the study, the dire need of a more effective and efficient system of data availability/collection was felt. There was also need for better liaison among various data generating agencies. These organizations should not in anyway be linked up with the agencies who set targets and do the evaluation of performance because it would lead to fictitious and inflated data. These agencies should be totally independent autonomous bodies working without any pressures from the government. Yearly benefit/cost ratios show wide fluctuations ranging from 1.49 in 1965-66 to 31.19 in 1980-81 and again going down to 16.21 in 1987-88 which could be due to variations in yearly

2.

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allocation of funds, organizational lapses, or political upheavals resulting in inconsistent policies over the years. However, the long term rising trend of benefit cost ratio implied better cost effectiveness during the period under reference.

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REFERENCES

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