#217 Society Responds to Longevity

Ageing Economics

Researchers and policy makers are working on plans for the “100 Year Life”. Is Society evolving faster than the plans?

A Five Minute Read

The 100 Year Life

“We inherited 30 years of extra life in the last century. The best idea we have come up with to use it, so far, is to tag it on at the end “

This a conference quote from Laura Carstensen. She leads the Stanford Centre on Longevity and is working on “A New Map of Life”. It envisages new and different lives that can last 100 years. In an earlier Newsletter Stereotypes vs Marketing I described her project. Their intention is to understand the policy implications and necessary adaptations to Society. These would have enable more people to enjoy a life of 100 years. It is impossible to use the existing paradigm. We cannot continue education until 25 and then work until 65. Economically that is unsustainable. Personally, how would we cope with twenty five years of “retirement”. Surprisingly Society seems to be evolving already.

“Defusing the Time Bomb”

Goldman Sachs last week published a global economic forecast. It is called “The Path to 2075 - the positive side of global ageing”. Like many economists, they discussed the dependency ratio. This is a common metric to assess the stress on the economy of a country as the share of old people increases. It looks at the number of people who have to be “taken care of” by a Society. It defines this in a ageist way by looking only at whether someone is working and can pay taxes. It ignores all the other ways that individuals add value to Society.(See various Newsletters on the Longevity Dividend)

It is even more arbitrary and uses chronological age. It adds together those under 15 with those over 65 and divides by the “working age population”. Most developed countries are set to see massive increases in this ratio. Some rising to the high nineties percentage. This is called the “demographic time bomb”.

Goldman Sachs did something different. Instead they looked at the actual number of years worked by the average citizen. This includes the increasing number of years worked by women. Historically, there has been a decline in “labour participation” starting from the age of 55. People stop wanting to work or more likely are unable to find work because of ageism. Both these gaps are now closing.

More importantly there are increasing numbers of people working beyond “retirement age”. They tried to relate years worked to the official retirement age in any country. They looked at the average number of years someone worked in their lifetime. There was surprisingly little relationship with retirement age. There was however a strong relationship to life expectancy. Society is adapting to longevity. An increasing proportion of older peope would suggest that the average years worked would decline. Instead it has increased. It has increased by twelve percent in the last twenty five years. This is even more surprising since people are starting work later in life.

The forecasts of the demographic bomb made ten or twenty years ago based on the dependency ratios are wrong. If they are measured properly, in years worked, they are decreasing not increasing. From a Governmental point of this is excellent news. People are contributing to their pensions for longer and retiring later.

Goldman Sachs suggest many reasons for this but stress the importance of healthy ageing. Life is extending in good years. They quote an IMF study also published last week. This is their latest Global Economic Forecast. It devotes a whole chapter of its report to the Silver Economy. They too suggest the importance of healthy ageing. Their analysis shows just how quickly this is changing. They looked at a 70 year old in 2022 in a developed country. They assessed both cognitive ability and physical ability. They found that the seventy-year-old had the cognitive ability of a 53-year-old in 2000. That is a 17-year improvement in only 22 years. Their assessment was that the 70-year-old had the physical capacity of a 56 years in 2000. These are dramatic changes. The improvements are greater than the increases in life expectancy in the same period.

Products for the “Old”

Goldman Sachs make an interesting point about the impact on different markets. They suggest that the perceived market for “old people’s products” may be much smaller than people think. They are focusing on what some authors call the “Fourth Age”. The last phase of life when frailty increases. See Newsletter #002 The age of the Zimmer frame and the mobility scooter. The age of the care and nursing homes. As life extends so does healthy ageing. Life expectancy is increasing in years but the “Fourth Age” is extending in months. The market for “old products” is increasing but nowhere near as fast as life expectancy increases would suggest.

The Evolution in Society

There are many other natural changes in Society that are consistent with an evolution to a 100 year life. “Children” are remaining in education for longer.See Newsletter#191 They are staying at home longer. In the last century Society invented the “teenager” and the “retiree”. Perhaps we will invent a new life stage after the teenager. For those not rushing to work because they have a long life ahead of them.

In numerous newsletters we have looked at the decline in marriage. At the growth in children born out of “wedlock”. People are not rushing into marriage. See the Bargaining for Babies Newsletter. We have seen that the age of the first child is now above 30 for most developed countries.Newsletter#046 .People are nor “retiring” when they reach pensionable age. Society is already adapting to much longer lives. It is taking Carstensen’s “ 30 extra years” and spreading them more evenly across our lifespan.

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