Sat, Jan 04, 2014 - Page 9 News List

Breaking down the fears over an increasingly aging population

A population’s age may not be an accurate indicator of its productivity, as healthcare advances are allowing people to work for more years than in the past

By John MacInnes and Jeroen Spijker

A century ago, children outnumbered the elderly by as much as 10 to one in most European countries. Today, there are as many people over the age of 65 as there are under the age of 16. In the UK, about one in six people is 65 or older, compared to one in eight Americans and one in four Japanese.

This shift has been powered by declining birth and infant-mortality rates in the first half of the twentieth century, together with rising life expectancy in recent decades. Whatever the causes, many are concerned that, in the coming decades, rapidly aging populations will increasingly strain health, welfare and social-insurance systems, putting unsustainable pressure on public budgets.

While such fears are not entirely unfounded, discussions about population aging tend to exaggerate the trend’s scale, speed and impact, owing to a fundamental misperception about how populations grow older. Unlike people, populations do not follow the life cycle of birth, aging and death. And, while a population’s age distribution may change, age becomes an unreliable way to measure a population’s productivity as lifespans increase.

COMPONENTS OF AGE

Age has two components: the number of years a person has lived (which is easy to measure for individuals and populations) and the number of years a person has left to live (which is unknown for individuals, but possible to predict for populations). As mortality declines, remaining life expectancy increases for people of all ages. This distinction is crucial, because many behaviors and attitudes — including those that are health-related — may be linked more strongly to remaining life expectancy than to age.

The standard indicator of population aging is the old-age dependency ratio, which divides the number of people who have reached the state pension age by the number of working-age adults. This approach fails to distinguish between being of working age and actually working, while classifying all people above the statutory pension age as “dependents.”

Social and economic shifts have broken the link between age and dependency. Young people spend an increasing number of years in education, while many older workers retire early, implying that they have sufficient personal savings. In the UK, the 9.5 million working-age dependents — people not in paid employment — outnumber those who are above the state pension age and do not work.

Moreover, the ratio disregards how, over time, rising life expectancies effectively make people of the same chronological age younger. In 1950, a 65-year-old British woman had an average life expectancy of 14 years. Today, she can expect to live another 21 years. For men, the figures are 12 and 18 years respectively.

Many other countries, especially in the developed world, have experienced similar shifts, with life expectancy having increased the most in Japan. Meanwhile, some Eastern European countries still lag behind, with no increase having been observed in Russia since 1950.

BETTER MEASURE

A better measure of population aging’s impact is the real elderly dependency ratio (REDR), which divides the total number of people with a remaining life expectancy of 15 years or less by the number of people actually in employment, regardless of their age. This measure accounts for the real impact of changes in mortality, by allowing the “old age” boundary to shift as advances in health prolong people’s productive lifespans.

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