Knowledge that Transforms

According to demographic transition theory a decline in infant mortality is viewed as a precondition for a fertility decline. This discussion describes some new methods that can be applied to cross sectional data in transition theory--the replacement hypothesis. The objective is to show how the effects of direct replacement hoarding and biological replacement can be separated and then estimated. Focus is on the methodology although data from the Malaysian Family Life Survey are used to illustrate the method. The methods employed use statistical techniques more fully described elsewhere. To estimate the fertility hoarding component of replacement in cross sectional data it is necessary to relate variations in the child mortality rate across families. The true child mortality rate for a family is not observable; only the realized mortality rate for a family which measures the true rate with error is observable. The child mortality rates for families may differ because of actions taken by the family. If conscious actions concerning inputs of time to child care are correlated with conscious actions to have children the familys observed mortality rate may be related to fertility not because of hoarding but because parents who desire more children also like to spend more time with them and so suffer a lower rate of child mortality. To avoid this source of contamination it is necessary to calculate the family mortality rate net of those factors which affect child survival and are possibly subject to parental choice. To do this a model of waiting time to the death of a child over the first 10 years of life for each child in the family was estimated. The method involves the estimation of a regression equation with the length of life of a child as the dependent variable. Once the family specific component of the child mortality rate has been estimated the number of births can be regressed on the number of deaths and the family specific mortality rate. The family size regressions given cannot reveal the effects of breastfeeding nor can they indicate the speed with which couples replace dead children. Because the Malaysia data used here provide detailed information on the dates of birth weaning and death of children it is possible to directly observe the effects of breastfeeding or the death of a child on the probability that another conception leading to a live birth results. The best way to exploit this data is to estimate a waiting time model. The model developed with Wolpin is again used to estimate the conception interval waiting time model. When the number of births was regressed on the number of deaths and corrected for spurious correlation the estimate replacement rate was 0.21. The uncorrected least squares replacement rate was 1.4 demonstrating the large effect of the spurious correlation.

Current interest in food prospects for the developing world is based on a set of four relatively straightforward questions. Upon closer analysis, however, these questions prove to be successively more complex. The first question is quite direct: Will food production in the Third World grow more rapidly than population? The answer seems to be a clear yes. Between 1961 and 1977, the growth of Third World production of major food crops averaged 2.6 percent a year, slightly higher than the 2.5 percent annual increase in population (Leonardo Paulino, forthcoming). There is every reason to believe that Third World food production in the future will continue to exceed population growth, since the processes for accelerated agricultural growth are now in place in so many developing countries and population growth rates are generally declining. The clear exceptions are Sub-Saharan Africa and the least developed countries (these are nearly synonomous). Even with a change in agricultural policies in these countries, there will be considerable time lags before food production growth rates exceed population growth rates. The second question is more involved, and much more important with respect to its policy implications: Will ratios of food production self-sufficiency increase in the Third World? In the long run, self-sufficiency ratios in the Third World will indeed increase-but that is the long run of decades. In the short run of this decade and the next, these ratios will just as certainly decline, as rapidly accelerating growth in the demand for food in the Third World exceeds capacity to accelerate domestic production growth rates. This conclusion is reinforced by the tendency for accelerated food production growth to be associated with forces that further accelerate growth in demand. The third question is decidedly complex: Will the real price of food (defined in terms of relative shifts in the demand and supply schedules for food) shift upwards over the next two decades (as compared to the zero or slightly negative trend over the past few decades)? It is my judgment that it will. In the Third World, demand for food will clearly continue to shift more rapidly than supply. It is less certain that the forces in developing countries will overbalance the converse relationship for the developed countries. The final question is the most far-reaching: What will be the impact of these forces on the nutritional status and the degree of poverty of low-income people? Since lowincome people spend 60 to 80 percent of increments to income on food (see my 1978 article), food prices are a principal determinant of their real income and nutritional status. Increasing per capita food production and imports allow a rising number of people to eat better. Preliminary analysis of crosssection data for African countries show that as aggregate per capita food supplies rise, the proportion of malnourished children declines (see Shubh Kumar, 1981). Increased capital intensity and the dynamics of food production itself will raise real wages for much of the laboring class (see Uma Lele's and my 1981 article). But for some individuals and particularly for those in countries left out of development processes, the situation will be more difficult in the future than in the decades of the 1950's and 1960's. This, I should emphasize, is the note of pessimism in this paper.

In 1958, James Tobin generalized the Keynesian theory of liquidity preference by means of his famous portfolio model in which the demand for money (narrowly defined) is treated as behavior towards [interest] risk. Whatever merit this theory may have had then has long since been questionable. The reason is the existence of a large set of substitutes for money, typically short-term money market instruments, which can be regarded as riskless, or virtually so, and which pay substantial interest. The availability of these instruments would appear to make Tobin's theory that money is held to cope with interest risk resemble a scenario without a recognizable cast of actors. In the literature on monetary theory, other authors have also expressed misgivings about the Tobin theory by noting that savings and (nontransferable) time deposits have the same risk properties as money but pay interest (see, for example, Robert Barro and Stanley Fischer, 1976). Although correct, the allusion to these deposits is simplistic. It is true that while both types mimic money's freedom from interest risk in the conventional sense of capital loss, time deposits are still exposed to a kind of interest risk, because they can be liquidated before maturity only with interest penalty. More important, business firms are either denied access to savings deposits or, as in the United States, can hold a maximum of $150,000 (per account) at commercial banks, thereby effectively eliminating large firms as holders. Furthermore, although business firms can own most time deposits, they typically do not (except for negotiable CDs, a money market instrument); they are loath to tie up funds in long-term maturities, and they can usually obtain the same or higher yields on other types of short-term debt instruments that are also negotiable. In the United States, households have long accounted for about one-third of demand deposits, business firms owning most of the rest. Therefore any effort to rest a case against the Tobin theory of money demand on the existence of savings and time deposits gets at only a small part of the problem. This stricture extends to so-called NOW and ATS accounts. These interest-bearing demand deposits (disguised under other names) are also denied to business firms. For them, the short-term instruments of the money market are the principal alternative to money in asset portfolios.

Female headship among black families long has been more pronounced in the United States in comparison with other ethnic groups. E. Franklin Frazier's classic study of the black family in the 1930's placed a distinct emphasis on the disproportionately high number of urban Negro families with women heads. Frazier's work suggested that throughout the pre-World War II period almost one-quarter of black families were headed by women. In the mid-1960's, female headship among black families was the subject of Johnson Administration policy planner Daniel Moynihan's notorious characterization of the black family as enmeshed in a tangle of pathology. But while the subsequent debate between disciples of Moynihan's pathology-disorganization perspective and the proponents of the strength-resiliency perspective raged, the proportion of black families with female heads has risen markedly. The proportion climbed from slightly less than 25 percent in 1965 to an astonishing more than 40 percent by 1980. Female headship also has grown among white families, but the rate of increase has not approached that among blacks. Between 1965 and 1980, the percent of white female-headed families rose from 9 percent to close to 12 percent.

One of the validity of a scientific hypothesis its forecasting accuracy. Thus one of the hypothesis that the market can be used to allocate manpower to defense, as to any other occupation, its ability to predict voluntary enlistments. In our earlier paper, a simple model of accessions and enlistments to the U.S. armed forces was estimated, the conclusion being that the allvolunteer force (A VF) is an experiment in market economics which, far from having failed, has not yet been put to the test (McNown et al., 1980, p. 130). Although one may not be particularly sanguine about the prospects for testing the market experiment itself, one can at least expose the hypothesis to further scrutiny. This paper reports the results of an accuracy analysis of forecasts generated by the model, and, since the results on the whole are encouraging and the topic remains of considerable interest to the public and to policymakers alike,1 also presents updated estimates of the personnel supply elasticities. I. A Military Personnel Supply Model