A Tale of Two Curves: Physical Life vs. Economic Life
Our physical strength peaks around age 24. We then slide down the curve to age 72. The first one-third of our lives are on the upswing to peak strength and fitness. The last two-thirds are heading down hill. Exercise and diet and lifestyles may delay our expiration date but will not eliminate it. Our perceptions are influenced by our personal mortality curve. As we get older and more feeble, we tend to become less optimistic and more cynical.
Our economic life is a much different shape. Our analysis of 18 different datasets including basic commodities, finished goods, and a wide variety of other products indicates that our economic abundance is increasing at a compound annual rate of 1.49 to 8.26 percent a year. If we are conservative and use a three percent rate to predict the future, abundance doubles every 24 years or so. This means that on your 24th birthday, your standard of living is 100 percent higher than the day you were born. But note that this rate is not linear, it is exponential. We don’t go from 1 to 2 to 3 to 4. We go from 1 to 2 to 4 to 8. This means that the day you turn 72, you are eight times, or 700 percent, richer than you were on the date of your birth.
When we use our physical life experience to judge the world or make predictions, we vastly underestimate the increase in our economic standard of living. If you’re 65 it’s easy to feel like life is getting worse. A better perspective is to compare your life at 24 to your parent’s and grandparent’s lives at 24. This perspective will indicate ever increasing abundance.
We also tend to have our first child around 24. As we’re peaking, they’re just starting. They’re getting stronger and taller while we’re getting weaker and older. Each generation is born into a world with greater abundance and prosperity. While it is easy to feel the aches and pains of physical aging and think the rest of the world is aging too, the reality is that the world is getting more and more prosperous each day.
Our economic lives improve if we are free to continuously add knowledge to our planet’s atoms. Knowledge makes atoms more valuable and more abundant at the same time. To better understand our world, we need to focus on the growth of knowledge instead of the aging of our bodies. We face limits to our mortality, but not limits to the growth in value-creating knowledge.
You can learn more about these economic facts and ideas in our new book, Superabundance, available at Amazon. Jordan Peterson calls it a “profoundly optimistic book.”
Gale Pooley is a Senior Fellow at the Discovery Institute and a board member at Human Progress.