Are we too concerned about an ageing population?
Will the economic burden be as bad as we fear?
Over at the LA Times there is an interesting piece about the ageing of the US population. It is interesting first because it has a fantastic infographic which plots the USA's population pyramid from 1933 until 2100. In it you can see the changes as the large bulge representing the baby boomers appears in the late 1940s and has moved its way up the pyramid until it has hit the retirement age threshold.
Although the baby boomers will have worked their way through the pyramid and their lives by the 2040s, the US population will have aged considerably in that time. According to the World Economic Forum an ageing population has various economic problems including "pressure on healthcare and other welfare systems and a much smaller working age population relative to the elderly." This is something that we have often mentioned on this blog.
However, perhaps things are not as gloomy as we have been led to believe. After all, what it means to be 65 today is not what it meant to be 65 back in the early part of the twentieth century. If we focus on the dependency ratios (those over the age of 65 as a proportion of the working aged population required to support them) then we will overlook the fact that not everyone, and indeed fewer people into the future, will simply retire and stop working once they reach the age of 65. The LA Times explains:
"Population economists Warren Sanderson and Sergei Scherbov propose recalibrating measures such as old-age dependency ratios to recognize such emerging trends. 'The old-age dependency ratio in the U.S. is forecast to increase by 61% from 2013 to 2030,' they observe. 'But using our economic dependency ratio, the ratio of adults in the labor force to adults not in the labor force increases by just 3% over that period. Clearly, doom-and-gloom stories about U.S. workers having to support so many more nonworkers in the future may need to be reconsidered.'"
This means that a number of those aged 65 and older will be contributing in taxes by working even if they are also drawing down the pension/social security. Of course this cost can be further reduced if governments push back the age at which social security can be claimed. (The current New Zealand government, for example, is adamantly against any such suggestion.)
On the healthcare side, there is an argument that people only really start becoming a large drain on healthcare resources in the last few years of life. Thus:
"'In Japan, for example, when the burden of the health care costs of people aged 65 and up on those 20-64 years old is assessed using only the conventional old-age dependency ratio, that burden is forecast to increase 32 percent from 2013 to 2030,' write Sanderson and Scherbov. 'When we compute health care costs based on whether people are in the last few years of their lives, the burden increases only 14 percent.'"
There might indeed be an argument that the conventional measure of the dependency ratio is too outdated - as more and more people work into "old" age, 65 might lose its magical status. This would especially be the case if governments increase the retirement age to reflect this reality or push more people into work to make it a reality.
However, at some point an ageing population will cost us economically: our entire social welfare schemes are built upon the assumption an ever-increasing working population. That assumption can no longer be relied upon and we are going to have to wake up to that fact. Sooner or later.
It sounds like something from a post-modernist farce, Aristotle analysing Trump’s popularity, but since everyone else has had their say, why not one of the imperishable philosophers? After all, as Carson Holloway points out in today’s Public Discourse article:
“To understand the Trump phenomenon, to get some objective view of it, one must get out of the bubble. And there is surely no place further outside the bubble than the mind of Aristotle. His thoughts are not provoked by our own political struggles or shaped by the emotions that such struggles necessarily foster. He was just trying to understand the nature of politics for all time. His is a position rare for its detachment, and one from which we should try to understand our own problems.”
The method certainly works, in my opinion, identifying the basic dynamics of The Trump’s Progress with great clarity. See what you think.
The baby boomers leading the presidential nomination race in the US illustrate a point made by population economists quoted in Marcus Roberts’ post in Demography today – namely, that passing the age of 65 does not necessarily make one a burden on the economy and the younger generation, because many older people keep on working. If you are not too keen on those examples, just look at Queen Elizabeth, holding office at 90.
There will be no newsletter on Monday because it is Anzac Day Down Under and we will be taking a holiday for the memorial. See you Tuesday.
Carolyn Moynihan
Deputy Editor,
MERCATORNET
 | Aristotle explains the Trump phenomenon Carson Holloway | FEATURES | 22 April 2016 The cry of the 'unjustly unequal'. Read more... |
 | Queen Elizabeth II and the rise of the 90+ club Christina Victor | DEMOGRAPHY IS DESTINY | 22 April 2016 Don't forget the other population explosion. Read more... |
 | Are we too concerned about an ageing population? Marcus Roberts | DEMOGRAPHY IS DESTINY | 22 April 2016 Will the economic burden be as bad as we fear? Read more... |
 | Sevens heaven: Kenya’s rugby team attains world glory Mathew Otieno | HARAMBEE | 22 April 2016 A bunch of relentless semi-pros smashes the world’s best team. Read more... |
 | Hacking hospitals and holding data hostage Heather Zeiger | CONNECTING | 22 April 2016 Old-fashioned crime with a new tech twist. Read more... |
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MercatorNet: Are we too concerned about an ageing population?
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