Can we afford to grow old? And will society be bankrupted by the high cost of supporting our rapidly growing elderly population? In Japan, for example, the proportion of the population ages 60 and older has nearly doubled over the past 20 years—jumping from 17 percent in 1990 to an incredible 31 percent in 2010. Comparable statistics in other countries show similar trends, with the worldwide population expected to hit the seven million mark by the end of 2011.
This matter of maturity has led international economists to ponder questions ranging from the fiscal viability of public pension payouts to the continued sustainability of healthcare services and programs. The answers may be found in a new book by authors Andrew Mason, a Professor in the Department of Economics at the University of Hawai‘i at Mānoa, and his counterpart at the University of California at Berkeley, Ron Lee. Their new release published by Edward Elgar, titled “Population Aging and the Generational Economy: A Global Perspective,” culminates a seven-year research project involving more than 50 economists and demographers from the U.S., Asia, Africa, Europe and Latin America.
The book may be particularly timely because shifts in the population age structure are occurring more quickly today than at any other time in human history, posing both challenges and opportunities for policymakers, believes Mason.
Half of the countries of the world—concentrated in South Asia, Latin America and Africa—are experiencing lower fertility rates, leading to fewer children and a working-age population growing faster than other age groups. Countries in this stage should be encouraged to invest their “demographic dividends” in educating and caring for the health of young people, who will become tomorrow’s workers, says Mason. On the other hand, countries in North America, East Asia and Europe have already completed this phase of demographic transition of low child-birth rates, a shrinking working population and an explosion of elderly.
Will the growth of the gray-haired sector lead to a society with a preponderance of poverty? Not necessarily, Mason answers. “It is true that generous pension programs, typical of many high-income countries in Europe, will be difficult to sustain as populations grow older. Similar concerns face policymakers in the United States in the form of rapidly escalating healthcare costs,” he says. “Yet today, the elderly in some countries support themselves largely from assets they accumulated earlier in life. The widely held view that population aging will lead to a decline in wealth, or a financial burden on families, is not supported by the evidence.”
To help policymakers worldwide understand the likely consequences of demographic changes, Mason, Lee and colleagues have established the National Transfer Accounts (NTA) network, a collaborative research effort that analyzes economic aspects of population aging around the world. By estimating income and consumption of goods by age, together with economic flows across age groups, NTA can provide vital information to policymakers responsible for developing sustainable programs in healthcare, education and pensions, and formulating policies that foster generational equity and economic growth.
There will be budget challenges associated with our aging population, but taking note of these issues today will help avoid catastrophic consequences in the future. For more information on the book and the NTA network, contact Andrew Mason at firstname.lastname@example.org or visit the NTA website at http://www.ntaccounts.org.
Top photo: A new book by UH Mānoa Professor Andrew Mason and UC Berkeley Professor Robert Lee reveal insights behind the world’s aging population.