Why do countries seem to undergo major sociological changes at ~$5000 per capita income

I don’t know if I’m cherry picking information, but it does seem that getting to/being at $5000 or so per capita income results in major changes to a society.

  1. The total fertility rate (the number of children born per woman) starts at roughly 6-7 in the lowest income countries. However by the time per capita income increases to $5000 per capita the rate has dropped to about 2.6. It goes slightly lower than that as per capita income goes up, but not by much (it usually stabilizes at 1-2). The biggest drop in TFR occurs from per capita income increases up to about $5000
  1. Democracy takes hold better in nations with per capita incomes close to $5000. While studying the transition from authoritarian to democracy Adam Przeworski found that nations with per capita incomes below $3000 almost always failed in the transition, but nations with per capita incomes of $6000 or higher almost always succeeded.

http://www.parapundit.com/archives/002031.html

More recently Adam Przeworski of New York University confirmed this truism by studying every attempted transition to democracy around the globe. He and his colleagues found that once a country passes $6,000 in per capita income it is virtually guaranteed to succeed in its transition to democracy. States between $3,000 and $6,000 have less than a 50-50 chance of staying democracies. And countries below $3,000 are almost bound to fail.

  1. Happiness (subjective well being, the ability to enjoy life) grows as income grows. But then it plateaus around $5000 per capita national income. A nation with a per capita income of $5000 is happier than one with a $1000 income, but not much less happy than a nation with a $40000 per capita income.

http://www.springerlink.com/content/b33212558g431647/

  1. The Kuznet curve varies with type of pollution, but it shows that pollution increases as per capita income increases, then starts to decrease with further increases in per capita income. Generally the transition occurs in the $3000-$10000 per capita income range.

http://filipspagnoli.files.wordpress.com/2008/09/environmental-kuznets-curve.jpg

  1. Life expectancy grows dramatically, then levels off around $5000 per capita income.

So is it that as a nation reaches $5000 in wealth they can obtain enough medicine, agriculture and shelter that they can focus on quality of life instead? Is it Maslow’s hierarchy of needs on a societal level? Life expectancy, fertility rate and subjective well being all tend to plateau at around $5000 while advances start to be made on pollution and democratic reform.

Many of the biggest problems facing humanity (pollution, overpopulation, authoritarian governments) seem to undergo major changes at roughly $5000 per capita income. Should this be a goal of developing countries, to reach about $14/day in income? There are attempts to rise above $1/day and $2/day levels of income, but reaching middle income status ($3000-10,000 per person) seems to be where the biggest changes occur.

I recall looking at lifespan and the amount a country spends on health care. After about $2000 per year, the amount of benefit drops off sharply for every dollar over. Looking at education spending, it looks like minimum yearly spending is probably around $1500.* The average person needs about $250 worth of food a month. A minimum diet would probably be about $200. So that’s $2400 a year.

$2000 + $1500 + $2400 = $4900

That’s pretty close to your $5000.

  • The Nation Master data only gives government spending on education. As such, for example, India only has a total education spending of $113.98. This is less than, for example, Mongolia ($319.23), so I’m guessing that for each number that is in Nation Master that there is an additional amount that is non-governmental money. India’s spending is probably entirely private. Looking only at governmental money I’d guess that the lower limit is about $1000, but since Spain and Greece are probably at the low end of feasability at ~$1200, I’m guessing that another $300 of private money is probably there to reach the true minimum.

Don’t be too quick to decide that $5000 is some kind of magic bullet. A good part of this phenomena is that if a country is able to get incomes up that high, they must be doing something right.

For example, this kind of income indicates that people are actually working jobs with paychecks and hours, not scrounging up money in the informal market. In order for a country to have an economy that supports widespread formal employment, they have to have enough transparency and justice that people are able to hold on to their businesses and can invest in them without fear that their assets will be arbitrarily seized.

So i’s not that the money magically made the government good, it’s that a good government created conditions where the money can happen. The money is a sign that things are going right, not the cause of it. And if the government is doing things right with the economy, they are probably doing some other things right as well.

Even Sven is right. The $5k gdp mark is where a whole lot of factors come together in a critical mass. Without all of those things, then you’re not going to have a sustainable economic development.

Personally, I think democracy is not that important. A functioning government, rule of law, legal redress, transparent regulations, basic infrastructure, stable foreign exchange etc) are far more important. If you look at the east asia experience (Japan, Korea, Taiwan, Singapore, China, etc) - these were hardly models democracy when they went up and through the magic $5k mark.

It’s very interesting to compare and contrast the experience of India (world’s largest democracy) and China (world’s largest country and nascent democracy). You can look at mutiple time periods in the post colonial experience.

If you’re really interested in the subject compare and contrast india and china, and where they stack rank today.

Slight hijack, but - how is China even a nascent democracy? So far as I know, there’s been no move towards an end to one-party rule, and elections for positions within that party are neither free nor fair. Political dissent remains a fine way to get jailed, tortured, or even killed. I’ll freely grant that China is a far more liberal autocracy than many others - stay out of politics, and as I understand it, you can more or less live your life unhindered by the state. I’ll even concede that, in some cases, autocratic states can outperform democracies in the short term when it comes to promoting both economic development and some norms of good government (Democratic Russia got its ass handed to it economically by the PRC in the 90s, for example - and to this day, I’d be hard-pressed to argue that Russia is a better place to live than the PRC.)

But China doesn’t seem like a nascent democracy. I could, of course, be hilariously wrong.

The democratic peace theory states that liberal democracies have few wars between each other, and they have less internal problems (famine, oppression). So in that regards, democracy should be a goal.

However bypassing the lowest common denominator populism and gridlock of democracy (like China can avoid) isn’t always bad.