Lucky Tan on Fertility Rate vs Home Prices

[makapaaa]

[h=2]Fertility Rate vs Home Prices[/h]

August 17th, 2012 |

Author: Editorial

Lucky Tan made an interesting comparison [Link] of the fertility rate vs home prices among the Scandinavian countries, Hong Kong and Singapore:

From the data, it does appear that the amount the citizens have to pay for their homes relative to their income is inversely correlated with the Total Fertility Rate (TFR).
In graphical term:

Housing Price-to-Income Ratio vs TFR​

The Pearson Correlation Coefficient is -0.96 which means both sets of data are inversely correlated to a high degree (with -1.0 as perfect correlation in an inverse manner). What this means is that in these sets of data, we see that when the price of the house relative to the annual household income is low, the TFR is high. In the case of the Scandinavian countries, their TFRs are close to 2.
TFR, of course, represents the total number of children an average woman will bear over her lifetime. A rate of 2 children per woman is considered the replacement rate for a population.
Intuitively, the graph makes sense cause if the Housing Price-to-Income ratio is low, it means on average the citizens will take less time to pay off the mortgage and they will have less worries, since housing is easily the largest expenditure incurred by a household. With peace in their minds, they are in a better position to make babies.
The Govt statisticians, of course, will warn you that correlation does not necessary prove causation. Low TFR may be caused by something else.
Here’s another graph but this time using the mortgage as % of income to measure housing affordability:
Mortgage as % of Income vs TFR

The Pearson Correlation Coefficient in this case is -0.95 which indicates that the data are still inversely correlated to a high degree.
Actually, many TRE readers have highlighted the obvious reasons why Singaporeans are not pro-creating. The reasons are best summed up by this particular reader:

CCK: PAP generate income by selling land, lots of land including land to HDB at market rates, and tax, all forms of taxes including COE, fuel, property, etc… the resulting effect in high cost of living in all aspects – housing, transportation, food, raising children. All can see why the TFR is amongst the lowest in the world, except the PAP which created this mess.
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[kongsimi]

If you want to have more babies.

I think it is much easier to move to scandanavia countries than to ask PAP to change our housing prices!

 

[Ash007]

Or Australia, they have a TFR of 1.89 yet housing to income ratio is close to 15 which would disprove this whole housing to income ratio versus TFR argument. Again, correlation does not imply causation!

If you want to have more babies.

I think it is much easier to move to scandanavia countries than to ask PAP to change our housing prices!

 

[ChaoPappyPoodle]

The best comparison is to look at the same age-group and type of work or even income of Singaporeans who are still here and those who have emigrated. Another group are new immigrants who have been here for at least 5 years and compare with their similarly grouped home nationals.

It's not just housing the has this correlation because one has to look at education costs as well. Most parents in the past 2 decades at least will want to ensure that they can afford their children's education. Australians have a higher TFT even though they have a high housing expenditure component but their education costs for university is very low.

 

[Loofydralb]

Or Australia, they have a TFR of 1.89 yet housing to income ratio is close to 15 which would disprove this whole housing to income ratio versus TFR argument. Again, correlation does not imply causation!

The correlation and causation is correct.

It is confined to small population and useful land mass countries. The economic development is totally different from Australia which is resource rich.

The study is applicable.

 

[ChaoPappyPoodle]

The correlation and causation is correct.

It is confined to small population and useful land mass countries. The economic development is totally different from Australia which is resource rich.

The study is applicable.

Please excuse Ash, he is very obviously a PAPzi schooled fool who can never indulge in deep thought. Everything must be provided in clear cut simplistic ways.

I mentioned the cost of education as being a huge coefficient and rightly so. If you couple that study with cost of higher education then the results will actually be more startling for developed countries. Hopefully no other PAPzi retards, including ministers and scholars, come on board to include Rwanda into the thought process.

 

[samsbestfriend]

Housing prices might be one of many factors affecting fertility rate of a population... for example researchers are finding correlations between fertility rate and such factors:
1- Children being as part of labour force, i.e. more children more income, so countries which parents can rely on income from children have high fertility rates
2- Infant Mortality, for example in countries where there is political instability and many children die, there is high fertility rate
3- increased education levels of a women decreases the fertility, this site displayes fertility rates, with education level of women, take a look. http://lebanese-economy-forum.com/2...highly-correlated-to-female-education-levels/

 

[Fook Seng]

Housing prices might be one of many factors affecting fertility rate of a population... for example researchers are finding correlations between fertility rate and such factors:
1- Children being as part of labour force, i.e. more children more income, so countries which parents can rely on income from children have high fertility rates
2- Infant Mortality, for example in countries where there is political instability and many children die, there is high fertility rate
3- increased education levels of a women decreases the fertility, this site displayes fertility rates, with education level of women, take a look.

1. Applies only in low income country.
2. What is the point of a higher TFR when it ends up with less children due to mortality?
3. You cannot do a study across so many countries and come to this conclusion that education is at fault. Such a study just shows that some of the countries have higher TFRs, others have lower TFRs.

Behind this, there are many possible reasons why this is so: economic development, cost of living, lifestyle factors, govt policies eg wrt housing, child support etc. To really determine whether education is really an issue you have to take away the cross border differences, have the study done within a country, have other factors like relative living costs removed, as well as lifestyle differences between different racial groups. Not an easy study.

 

[samsbestfriend]

1. Applies only in low income country.
2. What is the point of a higher TFR when it ends up with less children due to mortality?
3. You cannot do a study across so many countries and come to this conclusion that education is at fault. Such a study just shows that some of the countries have higher TFRs, others have lower TFRs.

Behind this, there are many possible reasons why this is so: economic development, cost of living, lifestyle factors, govt policies eg wrt housing, child support etc. To really determine whether education is really an issue you have to take away the cross border differences, have the study done within a country, have other factors like relative living costs removed, as well as lifestyle differences between different racial groups. Not an easy study.

I do agree that a simple correlation equation is a shallow and incomplete approach to finding the reason behind the increase or decrease of Fertility rate. However, keep in mind this was only given as an example that housing isn't the only factor.

Anyhow, I still believe that these factors, do apply to low income / high income countries, If I can't convincing enough, then Hans Roesling will certainly do the job. This a swedish medical doctor (http://en.wikipedia.org/wiki/Hans_Rosling), watch this video (http://www.ted.com/talks/hans_rosling_religions_and_babies.html), one of the best talks i've ever heard to.