From wedding bells to warning bells: The impact of falling birth rates on society
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Article Type
Sustainability Soapbox
Topic
Responsible Investing
Published
January 22, 2025
Read time
5 mins
Author
Aegon AM Responsible Investment Specialists
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In the final quarter of 2024, the Chinese Ministry of Civil Affairs reported that 4.74 million couples married in the first three quarters – a 16.6% drop from the 5.69 million in the same period last year (China Population Set for 51 Million Drop as Pro-Birth Moves Fail - Bloomberg). This reflects a broader global pattern that has far-reaching implications for societies worldwide. For example, developed countries like the United States and those in Europe, have also experienced marriage rates steadily decreasing for decades.

 

Why does this matter? There is a strong link between marriage and birth rates. Research indicates that married women tend to have higher birth rates. With young adults delaying or opting out of marriage, birth rates naturally decline. Economic factors like the high cost of raising children in urban areas, combined with changing social norms that favour personal and career goals over traditional family structures, contribute to this trend.

 

Declining birth rate presents significant socio-economic challenges. A shrinking workforce can reduce economic productivity and strain social welfare systems. The OECD reports that fertility rates have fallen over the past 60 years in member countries, posing serious economic risks.

 

This demographic shift can lead to higher government spending on healthcare and pensions, potentially resulting in higher taxes and slower economic growth. Fewer working-age adults paying into systems like National Insurance can destabilise these programs. Health-wise, an aging population faces more chronic illnesses, increasing the demand for healthcare services and long-term care. Additionally, fewer young people of working age can stifle innovation and societal dynamism.

 

We are already seeing innovative solutions emerge for these challenges. AI is transforming healthcare with predictive analytics and personalised treatments. Telemedicine and remote monitoring provide direct care to older adults, reducing hospital visits. Lifelong learning platforms keep them engaged and adaptable in a changing job market. Financial planning tools offer affordable wealth management, reducing reliance on the state. These innovations address aging population challenges while creating new markets and growth opportunities.

 

Several companies in the Aegon Global Sustainable Equity strategy are addressing the challenges and opportunities related to aging population. The fund is invested in key health themes that not only prolong life but also treat non-communicable diseases – for example the increasing rates of diabetes which rise with age (National Diabetes Statistics Report | Diabetes | CDC). Innovations like Insulet Corp’s Omnipod insulin management system and Novo Nordisk diabetes and obesity care with products like Ozempic and Wegovy for chronic weight management.

 

With strains on our healthcare systems, companies like JMDC Inc, who harness big data and ICT, enable efficient healthcare systems, addressing rising medical costs and regional disparities.

 

Building on these healthcare innovations, AI technologies developed by industry leaders like NVIDIA, TSMC, and Marvell, can enable and enhance economic opportunities through job matching, financial management, and the promotion of lifelong learning, digital literacy, and advances in healthcare with predictive analytics and assistive technologies.

 

These are, of course, just a few factors that contribute to this theme. Addressing the challenges of declining birth rates and an ageing population requires a collective effort. With the right approach and investment, we can transform these challenges into opportunities for a more resilient future.

Disclosures

Author

Aegon AM Responsible Investment Specialists
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