Friday, June 3, 2011

A Socionomically Predicted Birth Rate Blip

I recently ran across a report from the CDC entitled "Recent Decline in Births in the United States, 2007–2009" that tickled something in the socionomic part of my brain. 

I sat down and plotted the birth rate data from CDC against the monthly close figures for the DJIA in Excel and out popped a trend that looks like it could be described using the socionomic model:

DJIA Monthly Close vs. U.S. Birth Rate from CDC data

With the trend in mind I then visited the ever-useful site to confirm that Robert Prechter had done a similar, and much more thorough review over decade ago, entitled "Stocks and Sex: A Socionomic View of Demographic Trends."  The report is well worth your time and I especially encourage you to think about some of the ramifications as we head into a period of negative mood as deep or deeper than anything the U.S. has experienced since its foundation as a Republic.

Mr. Prechter did his study on stock prices vs. births and conceptions.  I took the CDC birth rate information as I think it provides a new riff to work from.

What jumps out at me is the flat-lining of the birth rate as SuperCycle Wave IV transitioned to the optimism of SuperCycle Wave V in the mid-1970's.  SuperCycle Wave III was accompanied by a massive boom in the birth rate, a demographic "wonder to behold" as it were.  As the Elliott Wave model teaches, "[t]hird waves are wonders to behold" with "favorable fundamentals (text, 10th edition, page 80).  The birth rate certainly shows reflects this, tied in as it is with the socionomic concept that decisions are shaped in the aggregate by herding instincts wired into the brain and not necessarily pure, cold reason and rationality.  Moving into Wave V, the birth rate flat-lined, showing small bumps in times of excessive positive mood, but in the main, remaining stagnant.  The personality of a Wave V is described as always "less dyanmic" than a Wave 3 (text, 10th edition, page 80) and the data starkly confirm this observation.

Assuming I am correct and mood plunges into a deep negative bias for an extended period of time, one can expect the rate of births to plummet as well.  While this is not something that may immediately impact your life, we need to think about what would drive such a collapse in births.

As Rome decayed and fell, birth rates collapsed as well.  One path a significant number of Roman citizens took to act out their feelings of negativity in terms of birth rate was the adoption of fiercely anti-reproduction stances on the part of the rising Christian that eventually rose to dominate the Empire.  Mr. Prechter touches on the demographic challenge faced by Rome, even before the rise of the Christians, and this fact has been noted by many scholars as a factor in, or the "cause" of the Fall of the Roman Empire.  By using the new religion of Christianity to justify the adoption of a life aesticism and chastity, this enabled men and women to act out the negative herding impulse that had swept the Empire and that eventually brought about its decay and destruction.

Looking ahead what new philosophies might encourage or support and crash in the birth rate assuming demographic trends are driven by mood?  A newly revived and ascetic Christianity that comes to dominate a large portion of the population?  A brand new "green" religion that views humans as a destructive force and works to limit the birth rate to zero population growth or an outright decline through persuasion or force?  A combination of plagues and a philosophical or religious shift in attitudes towards children and child birth?

It is a trend worth following and if you work for Gerber, you might be sweating out the coming years...


ElBlanco said...

Are you sure that plot is right? I don't recall the DJIA breaking above 5000 in the 50's.

Flagg707 said...

@ElBlanco: The red line is the birth rate and the purple is the DJIA. It is not very clear on the blog post, but if you click on the chart itself, it will come up as a larger figure. I'll double check my spreadsheet to make sure I didn't goof, just to be sure.

TonyFernandez said...

Why did an entire study need to be done? This should be obvious. People will have less kids when their personal finances are in worse shape.

David said...

Mike, I updated these data using CDC info in 2009 and had difficulty correlating it (I was updating Prechter's "Stock and Sex.")

With regard to TonyFernandez's comment, I disagree. Large families are associated with poorer people; as wealth and education rise, there is a very clear negative correlation with the number of children produced. It makes more sense to theorize that pessimistic, angry people choose to produce fewer kids, i.e. the socionomic hypothesis.

While the socionomic explanation is viable, the correlation coefficient is far from 1:1 so numerically it's not the best historical proof in the world.

David said...

On the other hand, the vast rise in stocks after 1974 unconfirmed by birth data may be just one more enormous non-confirmation signaling the period is a fifth wave (largely due to debt-driven asset inflation) which argues that the bust we face is of staggering proportion.

We "Chicken Little's" have pointed to these data points (non-confirmations) for so long that most people stopped listening...which is exactly what is required to have the greatest economic bust in history occur.

Economically, politically, and social-health-wise, Western Civilization is a house of cards built on quicksand, a mighty oak that looks strong but is in fact hollow and rotting from within.

The herd is due a terrible fate, which is why we feverishly work to find an alternate path to the lemmings marching toward the sea.

Flagg707 said...

@Tony: Good question about why study this if it is intuitive. Me personally, I am concerned about the philosophies that will be growing up during this coming bear era to "explain" the negative sentiment that will wash over society. It is my opinion that the big flatline in the rate of growth during this last leg up in optimism from the mid-70s until 2000 (or 2007 depending on your view) was a huge non-confirmation of the relative strength of the era (as David alludes to). If this rate crashes deeply during the coming years, what sort of political movements will grow up that will bring force of law to what might be very hostile attitudes towards childbirth.

Plus, just because something is intuitive doesn't mean there aren't nuances to examine.

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