Demographics is a statistical study of the human population. Demographic data is socio economic informations like income, age, sex, employment, birth rate, death rate, education and more. Using survey questions, this information related to population can be easily and effectively collected.
Government, non government organisations and other corporations used these demographics. These demographics supply information related to population characteristics. These characteristics are used as primary sources to develop policy and market research.
By effectively gathering datas that affect the age structure of the population can result in demographic dividend. Due to changes in the age structure of the population, the economic condition changes. This growth of the economy is known as demographic dividend.
Objectives of demographic data:
1. Primary data for decision making:
Demographics are the data that act as a basic source of information to make economic policies and strategic decisions. For example, a company manufacturing vitamin tablets may research the age and income of people who can afford their products.
2. Predictive algorithm:
Demographic analysis of information gives a way to predict the upcoming situation. The scenario may either rise or recession, this demographic data helps us to be prepared for whichever circumstances that may arrive.
3. Supports dynamic adoption:
In this dynamic world, the taste and preference of the consumers changes daily accordingly. Demographic analysis, which is all about collecting data regarding particular populations’ characteristics, helps us to predict the needs and wants of a consumer.
4. Provide Socio-economic information:
Demographic data or demographic information is nothing but the statistical study of the human population. Statistical study is nothing but economic information. On the other hand, humans are social animals, so data related to humans are equally a social information. So it is very clear that demographic datas is nothing but social economic information.
5. Help to find target consumers:
Demographic variables like age, income level, employment, location, level of education and so on are gathered to find the perfect customer. On the other hand, the datas of general identity of consumers like datas related to hobbies, lifestyle, preferences and so on can make an accurate way to reach the consumers, who are the real users of the product. Information and datas related to the users (consumers) of a product is more important than that of a mere buyer of the product (customer).
6. To make economic policies:
As we already discussed, demographic information is a primary source of data to make strategic decisions and policies. Demographic datas play a vital role in making economic policies. For a clear understanding let us take an example of change in the age structure of the population. The fertility rate and mortality rate are the basic datas that brought on a huge prediction of change in the age structure. This growth in the age structure of the economy is known as demographic dividend.
What is the demographic dividend?
There are various changes in the economy regularly. Changes may be either positive or negative. These economic changes, especially due to change in the population structure, may be defined as a demographic dividend. To be accurate, the economic growth due to the change in the population age structure is known as demographic dividend.
Effects of demographic dividend:
Majorly please demographic dividend can be found in the following 4 areas of a country:
1. Economic growth:
Change in the age structure of the population the dependency ratio changes. The group of people under the age group of 0 to 14 who depend on the other people to survive are the dependent people. The ratio between these dependent people to the people from 15 to 65 is dependency ratio. Increases or decreases in the dependency ratio affect the GDP of a country. If the dependency ratio decreases the GDP increases. Logic behind this is that, the people in the age of 15 to 65 would be higher than the dependent people. Now, obviously the number of working people will be higher when the dependency ratio is less. so, as the number of working people is higher the GDP is higher. So now, it is clear that when the dependency ratio decreases the GDP increases.
2. Labour supply:
Identification of the age structure of the human population would help to find the possible number of available working forces. This would also help to find available workers in both the genders. These data of demographics supply the labourers. As labour supply increases the productivity of the country.
3. Human capital:
In the major elements of a business like land, labour, capital and premises. Labour force, that is human, is a very important capital of any business. Either as an employee or an owner, women are an asset to every business. So the data related to birth rate gives a great prediction of the future human capital.
Diversified birth rates help to increase individual savings. For example, in the place of three children to a parent if a child exists the assets of the individuals differ.
At the same time, if the birth rate increases, the future human capital increases. The future income of a country also increases. As the income increases, savings also increases.
Till now we have discussed the datas related to population, which is demographic data and the growth of the economy due to change in the population that is demographic dividend. Now let us look into a very interesting theory related to population change.
Demographic transition theory:
The demographic transition theory tells the relationship between population growth and economic development.
This majorly discusses the birth rate and the death rate that affects economic development.
To make it clear this theory discusses the change in the birth rate from higher to lower and the change from the higher death rate to the lower death rate. so collectively this theory can be termed as demographic cycle.
This is not the law of demographics but it is a short description of the evolution process of population growth and economic development.
Demographics are the key source of information for today’s business world. It is an immunity for every business to boost their income. Effective collection of demographic data results in efficient utilisation of these information to generate huge output.