Population growth, externalities, and poverty

The authors review the implications for social policy in developing countries of two major justifications for fertility reduction: the externality argument and the income redistribution argument. First they set out the arguments. In terms of how policy affects the poor, they show that the implications of the two different arguments are virtually identical. Both imply that the only reasonable way to view policies to reduce fertility is as activities in which one segment of society (the rich) is offering another segment (the poor) compensation to elicit a change in behavior. Where there are true externalities, the rich may also end up as well or better off in terms of income than they were, because everyone can benefit from the overall efficiency gain. Where there are not true externalities, the poor are made better off in the sense of real income while the rich gain in terms of utility by financing the necessary social programs. The authors outline briefly the program implications of this welfare approach: more emphasis on a package of targeted social programs, and more emphasis in family planning services on client welfare and contraceptive choice.