Download Chapter 16.3

Compounding
Which would you rather have?
• $10,000 per day for a the month of
June?
• $0.01 a day doubling each day, for the
month of June?
• If you chose $10,000 a day you would end up with
$300,000.
• However, if you chose the $0.01 doubled each day at the
end of June you would have $ 10, 737, 418.23.
• Such is the power of compounding, since growth occurs
on top of the growth that has already taken place.
• The impact of compounding in demography is not as
dramatic.
•Consider a Canadian couple married in 1960,
theoretically they could have 16 million descents today.
• A simple way to think about the impact
of population growth is to consider
what is called the doubling time for a
population.
• Doubling time is the amount of time it
would take for a country’s population
to double at the current growth rate.
• The rule of 70 is an easy way to
estimate this. Simply divide 70 by the
population growth rate, and this gives
you an estimate of how many years it
will take the population to double.
• If Canada’s growth
rate is 0.8%, How
many years will it
take to double?
70/0.8 = 87 years
• Countries with a much higher growth rate would
double in size at a quicker rate. A country like
Togo has a growth rate of 2.4%; therefore it is
estimated they would double every 30 years.
• To understand the significance of this, it would
be very difficult for a rich country like Canada to
supply food, housing, healthcare, education, and
other essential items for its country if the
population doubled every 30 years. For a poor
country like Togo it is impossible.
Different Ages – Different Roles
• Demographers have three important
stages in life
• Children (Under 15)
• Working adults (15 to 64)
• Older Adults (65 and over)
• There is an assumption that children and older adults are
unable to work. Under 15 are too young to hold a
permanent job, while 65 and older are too old to hold a
permanent job.
• These two age groups are part of the dependency load
as they are dependant on people for support.
• A high dependency load puts a great deal of pressure on
the society to provide things like education, housing,
healthcare, and senior homes.
• Canada today has a dependency load of 31%(18%
children, 13% seniors).