The view of the demographic transition presented here should not be confused with an older, more simplistic theory, which asserts that low birth rates always correlate with improved economic well-being. This latter view has now been discredited, in particular by the observation that Mexican immigrants in Los Angeles have a much higher birth rate than culturally similar peasants in Mexico City, despite the higher incomes of the immigrants. This effect is ascribed to welfare and similar programs that subsidize larger families in the United States. Furthermore, the notion that lower birth rates correlate with prosperity is contradicted by historical trends in the United States. As was observed earlier, for instance, birth rates dipped substantially during the 1930s and other periods of depression.

According to our analysis, birth rates (and their relationship with economic conditions) can be properly understood only by examining a society's political system—in particular, by observing whether or not individual rights are suppressed by statist policies under that system.