Showing posts from category aging.
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Book Review: ‘World Population Policies’ Offers Sweeping Overview of a Complex Field
›July 2, 2012 // By Elizabeth Leahy MadsenWith much attention in the international family planning community directed to the impending anniversary of the 1994 International Conference on Population and Development and the closing date of the Millennium Development Goals, the fact that 2012 is the 60th anniversary of two other milestones in population programming may have escaped notice. In 1952, the International Planned Parenthood Federation was created, and India became the first country to formulate a national policy to reduce population growth.
These and many other landmarks are highlighted in World Population Policies: Their Origin, Evolution and Impact, a new book by demographer John May that reviews several decades of policies, advocacy, and program interventions addressing the full range of diverse demographic trends seen globally.May, who spent more than two decades working on population issues at the World Bank and other international institutions before recently assuming a fellowship at the Center for Global Development, is well-positioned to provide such an ambitious overview. Although the breadth of material included in the book means that some topics receive less coverage than a specialist might wish, it serves as a sound introduction to this diverse field, and offers some particularly interesting case studies.
The book’s main chapters begin with a summary of current population trends, including a comprehensive array of figures and statistics about population size, distribution, and projections. Some important concepts, such as the demographic transition and dividend, are perhaps covered too quickly, and in such cases the book would have benefited from more than a handful of figures, charts, and graphs. May classifies regions and countries as demographic “hotspots,” where the number of people outstrips available resources, and “coldspots,” which have too few residents. He makes an ambitious suggestion that high-density countries facing resource challenges, such as Bangladesh, should consider promoting rapid fertility decline below replacement level to stop population growth, then reverse course and increase to a rate that promotes a stable population – but such a reversal from low fertility is a feat that has stymied several countries in Europe and East Asia.
Evolution of the “Population Movement”
In addition to summarizing the ways that demographic issues have been framed in the past several decades, May briefly describes the long-running debate between demographers and economists about the ways in which population is theorized to affect economic development.
Three points in this chapter were particularly striking: First, the concept of family planning as a human right dates from well before the 1994 International Conference on Population and Development. In 1968, the Tehran International Conference on Human Rights defined the ability to choose family size and spacing as a fundamental right; still, some programs, such as India’s under the Emergency-era government of the late 1970s, adopted coercive practices. Second, population policies are not limited to official initiatives targeting fertility, mortality, and migration, but also encompass implicit or “passive” policy measures that arise without advance planning or that have an unintended effect on demographic trends. Related to this, May suggests that “contextual variables” such as education, health, gender, culture, and religion can have a greater impact on population policies’ effectiveness and demographic outcomes than government structures or funding.
Although population policies are most often designed at the national level, May’s discussion of the “population movement” highlights the influence of international networks and donors on such policies. By the late 1960s, the U.S. Agency for International Development had begun funding family planning programs overseas, and the United Nations Population Fund (UNFPA) was active. Although the United States has become less dominant over time, population programming remains a Northern-driven movement.
Beginning with a meeting in Belgrade in 1965, a series of international population conferences successfully raised the prominence of population issues on the global development agenda and built consensus around international goals, while also becoming increasingly political.
May’s cautions about such conferences are timely given this month’s London Family Planning Summit: “Consensus-building through international conferences and their preparatory meetings is often inefficient as a process, whereas such events could be used to promote learning among policymakers and experts…The gap between the conferences’ resolutions and the actual policies implemented at country level is important to remember” (110).
Growth and Aging Distinguish the Demographic Divide
In his chapter focusing on the developing world, May notes that population policies have become broader in the nearly 20 years since the Cairo conference, incorporating a reproductive rights framework while also addressing new issues such as the environment, HIV/AIDS, and poverty. But under this more holistic approach, national policies are susceptible to becoming overly diffuse, with an ambitious agenda not matched by concrete action plans.
The challenges expand to policy implementation as well. Kenya is profiled as emblematic of the difficulties facing population programs in fast-growing sub-Saharan Africa, particularly political disinterest, mismanagement, opposition from some religious groups, and commodity shortages. But when implemented well, such policies can be very successful. The book offers a thorough summary of research findings on the common features of effective family planning programs (such as leadership, monitoring performance data, and opening access to contraceptive methods at lower levels of the health system), as well as their demographic impact. Several country examples are cited to show that family planning programs reduce lifetime fertility rates by 0.5 to 1.5 children per woman, while also benefiting individual and social health, income, and well-being.
While population policies have been often effective at shaping demographic trends in high-fertility settings, even in changing cultural norms about family size, May notes that their impact has been notably weaker in reversing the trajectory of declining fertility in developed countries. While countries such as France have maintained a fertility rate close to, albeit still below, replacement level thanks to generous paid parental leave, housing initiatives and public child care facilities, policies that try to boost low fertility through financial compensation have been particularly ineffective.
Developed countries are less likely to have formal population policies and tend to address demographic issues through incentives and disincentives implemented by multiple agencies. Aging and immigration are receiving greater attention in such countries, along with low fertility rates. Population aging raises policy concerns that are both economic and social, and May focuses largely on the benefit of reducing incentives for early retirement. He notes that thanks to improvements in health and life expectancy, “today’s 65-year-old persons are young compared to their counterparts” of previous generations (180). Despite their economic soundness, government efforts to raise retirement ages are widely unpopular, and France’s newly elected president has promised to cut the retirement age from 62 to 60 for some workers.
What Comes Next
Some observations are intriguing and could have been further detailed. For example, May notes a recent “fragmentation” of organizations working on population issues, and suggests that “too many institutions and NGOs appear to support their own limited mandates as they also struggle for resources that are less abundant” (5). Decentralization and integration within health systems is a growing trend that could have been discussed in more detail, along with the legacy of pronatalist laws and attitudes by colonial powers in Africa, the effect of recent European efforts to tighten immigration policies, and the achievements of forums designed for collaboration on population policy issues (for example, the United Nations Commission on Population and Development or the Reproductive Health Supplies Coalition).
Looking towards the future, May foresees continued integration of demography with related development issues, such as poverty reduction and equitable growth, gender and youth perspectives, environmental issues, and conflict prevention. He notes a few challenges, including sub-Saharan Africa’s lag in fertility decline and the overall ineffectiveness of policies aimed at addressing the pressures of urbanization on infrastructure and resources.
In high-fertility settings, May recommends that instead of framing reproductive health writ large, policies should more specifically target family planning and women’s empowerment, including education and income-generation opportunities as well as legal rights. Bangladesh is presented as a model for other countries, as a setting where cultural change and economic development laid the groundwork for successful family planning outreach efforts. Most of all, May entreats government leaders to maintain a policy focus on population issues, regardless of where they stand in the demographic divide.
Elizabeth Leahy Madsen is a consultant on political demography for the Wilson Center’s Environmental Change and Security Program and senior technical advisor at Futures Group.
Photo Credit: “Crowded Shopping District,” courtesy of flickr user EnvironmentBlog. -
Nicholas Eberstadt, Wilson Quarterly
Population Changes Set to Remake Japanese Society
›The original version of this article, by Nicholas Eberstadt, appeared in the Wilson Quarterly.
In 2006, Japan reached a demographic and social turning point. According to Tokyo’s official statistics, deaths that year very slightly outnumbered births. Nothing like this had been recorded since 1945, the year of Japan’s catastrophic defeat in World War II. But 2006 was not a curious perturbation. Rather, it was the harbinger of a new national norm.
Japan is now a “net mortality society.” Death rates today are routinely higher than birthrates, and the imbalance is growing. The nation is set to commence a prolonged period of depopulation. Within just a few decades, the number of people living in Japan will likely decline 20 percent. The Germans, who saw their numbers drop by an estimated 700,000 in just the years from 2002 to 2009, have a term for this new phenomenon: schrumpfende Gesellschaft, or “shrinking society.” Implicit in the phrase is the understanding that a progressive peacetime depopulation will entail much more than a lowered head count. It will inescapably mean a transformation of family life, social relationships, hopes and expectations – and much more.
But Japan is on the cusp of an even more radical demographic makeover than the one now under way in Germany and other countries that are in a similar situation, including Italy, Hungary, and Croatia. (The United States is also aging, but its population is still growing.) Within barely a generation, demographic trends promise to turn Japan into a dramatically – in some ways almost unimaginably – different place from the country we know today. If we go by U.S. Census Bureau projections for Japan, for example, there will be so many people over 100 years of age in 2040, and so few babies, that there could almost be one centenarian on hand to welcome each Japanese newborn. Population decline and extreme population aging will profoundly alter the realm of the possible for Japan – and will have major reverberations for the nation’s social life, economic performance, and foreign relations. Gradually but relentlessly, Japan is evolving into a type of society whose contours and workings have only been contemplated in science fiction. It is not clear that Japan’s path will be a harbinger of what lies ahead in other aging societies. Over the past century, modernization has markedly increased the economic, educational, technological, and social similarities between Japan and other affluent countries. However, Japan has remained distinctive in important respects – and in the years ahead it may become increasingly unlike other rich countries, as population change accentuates some of its all-but-unique attitudes and proclivities.
Continue reading in the Wilson Quarterly.
Sources: U.S. Census Bureau.
Photo Credit: Japanese woman enjoying some free soup for breakfast, courtesy of flickr user USAFA87. -
Youth, Aging, and Governance: A Political Demography Workshop at the Monterey Institute of International Studies
›April 5, 2012 // By Schuyler Null“Demography is sexy – it’s about nothing but sex and death (and migration),” said Rhodes College Professor Jennifer Sciubba at the Monterey Institute of International Studies during a workshop on March 30.
Jack Goldstone of James Madison University, Richard Cincotta of the Stimson Center, and ECSP’s Geoff Dabelko joined Sciubba in a workshop for students and faculty on key developments in political demography. Sciubba and Cincotta were contributors to Goldstone’s recently released edited volume, Demography: How Population Changes Are Reshaping International Security and National Politics.
“Demography is changing the entire economic and strategic divisions of the world,” Goldstone told the room. “We’ve had a 15 year increase in life expectancy just in the last half century,” and today, “90 percent of children under 10 are growing up in developing countries.”
Many countries, said Goldstone, are caught in a difficult race between growth and governance, with governments struggling to provide services and opportunity to their growing populations. This challenge is especially acute in cities, which for the first time in human history are home to the majority of all people.
At the same time, aging is a phenomenon that will affect many developed countries. In the United Sates, the baby boomers are becoming “the grayest generation,” Goldstone said, and similar imbalances between the number of working age people and their dependent elders will soon affect Western Europe, Japan, Korea, Russia, and others.
Re-Examining the Aging Narrative
Some have predicted this “graying of the great powers” will have disastrous consequences for many of the G8, as state pension costs blunt economic growth and innovation, military adventurousness, and global influence, but Jennifer Sciubba presented a case for why fears may be overblown.
When discussing the aging phenomenon in developing countries, many analysts focus too closely on the fiscal environment, argued Sciubba. This creates tunnel vision that ignores the potential coping mechanisms that states have at their disposal. Alliances, for example, are under-accounted for, she said, and closer European Union and even NATO integration could help ameliorate the individual issues faced by aging countries like Germany, France, and Italy.She also pointed to evidence that the developing world’s declining fertility may be have been “artificially depressed” by large proportions of women that delayed pregnancy starting in the 1990s. But now the average age of childbearing has stopped rising. The UN total fertility rate projections for industrialized states for the period 2005 to 2010 was revised upward from 1.35 children per woman in 2006 to 1.64 in 2008 and 1.71 in 2010.
This brings into focus a key leverage point for many developed countries that is not often discussed in traditional conversations about aging: making the workplace friendlier for women. Offering money to couples to have children does not work, said Sciubba – women do not make a simple monetary cost-benefit analysis when they decide to have children. Much more likely is a calculation about the cost to their professional career. Therefore, instituting more liberal leave policies and making it harder for employers to fire both men and women for taking maternity or paternity leave is more likely to have a real impact on fertility rates.
The growing efficiency – and retirement age – of today’s workers can blunt the effect of older workforces on developed economies, said Sciubba. And the stability, strong institutions, and legal protections for innovation are all advantages that will continue to attract the best and the brightest from developing countries.
The competing phenomena of aging in the developed world and continued growth in the developing – which some have dubbed the “demographic divide” – will likely make immigration a very important, possibly friction-inducing issue in the coming decades. Goldstone pointed to the challenges Europe is having today coping with immigrants from North Africa and the Middle East as a possible harbinger of things to come.
Applying Demographic Theory: The Age Structural Maturity Model
While many regions will continue to experience population growth for the next two decades, including sub-Saharan Africa, the Middle East, and parts of East and South Asia and Latin America, the overall global trend is towards older populations. This is good news for democracy, according to Richard Cincotta.
Cincotta, who consults with the National Intelligence Council on demographic issues, explained his “age structural maturity” model, which finds a historical correlation between the median age of countries and their Freedom House scores (an annual global assessments of political rights and civil liberties). Older populations tend to have more liberal regimes, while the opposite is true in younger populations. Combining this model with demographic projections, one can predict when it will become likely for democracy to emerge as a country ages. Before the Arab Spring – to some disbelief at the time – Cincotta used the model to predict that Tunisia would reach a 50/50 chance of achieving liberal democracy in 2011 (see more on this in his posts about Tunisia and the Arab Spring).
For those youthful countries that do achieve some level of liberal democracy, the model predicts they have a high likelihood of falling back towards authoritarianism (Mali is a tragic recent example).
This model, said Cincotta, can be a useful tool for analysts to challenge and add to their assessments. For example, it paints a bleak picture for democracy in Afghanistan (median age 16.6 years old), Iraq (18.5), or Yemen (17.7) and a comparatively rosier one for Tunisia (29.8), Libya (26.1), and Egypt (25.0). Some other observations may useful as well: no monarch has survived without some limits of power being introduced after countries reach a median age of 35, and military rulers too never pass that mark.
The age structural maturity model is, however, not perfect, Cincotta said. The most common outliers are autocracies (Freedom House score of “not free”) and partial democracies (“partly free”) with one-party regimes (China, North Korea), regimes led by charismatic “founder figures” (Cuba, Singapore), or those that where the regime is either supported or intimidated by a nearby autocratic state (Belarus).
Like all analyses, the model has its limitations, said Cincotta, but if used as a tool to generate “alternative hypotheses,” it can help predict dramatic political changes, like the Arab Spring. The research also suggests that the “third wave” of democratization is not over and will in fact continue to expand as countries with younger populations mature.
In conclusion, the panelists recommended the students find ways to include political demography in their work moving forward. “Consider it an alternative tool that may be useful,” said Geoff Dabelko. Policymakers today are overburdened with information and conventional analyses can sometimes become stuck in familiar lines of thought – demography can supplement these or shake them up by providing alternative narratives.
Sources: UN Population Division.
Photo Credit: Schuyler Null/Wilson Center; chart courtesy of Richard Cincotta. -
Taking Stock of Past and Current Demographic Trends
›March 29, 2012 // By Kayly OberECSP is at London’s 2012 Planet Under Pressure conference following all of the most pertinent population, health, and security events.
“Demography is a science of assumptions,” said Sarah Harper, a demographer at the University Oxford, during a panel at the Planet Under Pressure conference. Thirty years ago, she said, demographers believed the world would reach 24 billion by 2050, now the latest UN median projections predict 10 billion. That means a lot of progress has been made for families and development as a whole, but there are some obstacles yet.
Harper stressed that the development community should focus on parts of the world with stubbornly high fertility rates, particularly sub-Saharan Africa. If total fertility rates came down there by 2050, below the expected four children per woman, the region could be home to as many as a billion fewer people than current projections. The earlier we acknowledge this growth, the easier it will be to offer interventions like family planning and reproductive health to hedge it, she said.
Additionally, demographers need worry about important changes in modern population and environment dynamics.
As Harper notes in an interview with ECSP (video below):There has been so much hype around population growth that I think we’ve ignored the other characteristics of population…that it’s changing in its density – we’re all becoming more urban; it’s changing in its distribution – we’re becoming more mobile; and it’s also changing in its composition – the world is getting older.
Sir John Sulston of the Royal Society agreed: population is a more-nuanced subject than many can digest. “Population has been much too ignored because it’s difficult,” he said.
I think it’s very clear that these changes are going to interact with the environment and be affected by environmental change but are also going to impact upon future environmental change.
Sulston urged us to look not just at the diversity of the world, but also the inequity. Today, there is “inequity in countries, between countries, and between generations.”
There is no silver bullet – the international community need to look at three components in concert if we want to make a difference, he said: first, bring down infant mortality; second, invest in family planning; and third, emphasize education for women.“It’s not about surviving, it’s about flourishing,” Sulston said.
When the ECSP delegation isn’t attending plenary and breakout sessions here at the conference, we’re manning our Wilson Center information booth. And over the last few days, we’ve had the pleasure of introducing our work to a number of new faces, including curious faculty, energetic students, and hopeful doctoral candidates. If you’re attending please feel free to stop by.
Expect more updates from East London, including more short video interviews, in the next three days as ECSP highlights the unique perspectives coming out of the Planet Under Pressure conference.
Pictures from the event are available on our Facebook and Flickr pages, and you can join the conversation on Twitter (#Planet2012) or watch the livestream here.
Photo Credit: Sean Peoples/Woodrow Wilson Center, -
Political Demography: How Population Changes Are Reshaping International Security and National Politics (Book Launch)
›“The world’s population is changing in ways that are historically unprecedented,” said Jack Goldstone, George Mason University professor and co-editor of the new book, Political Demography: How Population Changes Are Reshaping International Security and National Politics. [Video Below]
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Ryan Britton: Addressing Population in Science Media for ‘EarthSky’
›“What we do is educate the general public and advocate on behalf of science to the general public,” said EarthSky Managing Partner Ryan Britton in this interview with ECSP. “Ultimately we try to bring science to people who don’t normally get science information.”
Part of that effort is addressing population dynamics – growth, aging, youth, food security, etc. – which is often a challenging subject. EarthSky’s coverage over the last year included a series of radio shows on global food security and the “year of seven billion,” which won them a second Global Media Award from the Population Institute in January (alongside New Security Beat!).
EarthSky productions appear on television, radio, online, and in multiple languages. “For us, it’s about getting science out to the general public as best we can,” said Britton.
In terms of population-related issues, he said, allocation of resources, how growing population is affecting ecology and biodiversity, and the effects of climate change are all topics on their radar. “But we do it within the lens of talking about humanity and our continued prosperity,” Britton said. “That’s important for people to hear – what are the solutions, how are we going to get through this, how are we going to be OK? And so those are the questions we’ll keep asking.” -
Consumption and Global Growth: How Much Does Population Contribute to Carbon Emissions?
›July 6, 2011 // By Schuyler NullWhen discussing long-term population trends on this blog, we’ve mainly focused on demography’s interaction with social and economic development, the environment, conflict, and general state stability. In the context of climate change, population also plays a major role, but as Brian O’Neill of the National Center for Atmospheric Research put it at last year’s Society of Environmental Journalists conference, population is neither a silver bullet nor a red herring in the climate problem. Though it plays a major role, population is not the largest driver of global greenhouse gases emissions – consumption is.
In Prosperity Without Growth, first published by the UK government’s Sustainable Development Commission and later by EarthScan as a book, economist Tim Jackson writes that it is “delusional” to rely on capitalism to transition to a “sustainable economy.” Because a capitalist economy is so reliant on consumption and constant growth, he concludes that it is not possible for it to limit greenhouse gas emissions to only 450 parts per million by 2050.
It’s worth noting that the UN has updated its population projections since Jackson’s original article. The medium variant projection for average annual population growth between now and 2050 is now about 0.75 percent (up from 0.70). The high variant projection bumps that growth rate up to 1.08 percent and the low down to 0.40 percent.
Either way, though population may play a major role in the development of certain regions, it plays a much smaller role in global CO2 emissions. In a fairly exhaustive post, Andrew Pendleton from Political Climate breaks down the math of Jackson’s most interesting conclusions and questions, including the role of population. He writes that the larger question is what will happen with consumption levels and technological advances:The argument goes like this. Growth (or decline) in emissions depend by definition on the product of three things: population growth (numbers of people), growth in income per person ($/person), and on the carbon intensity of economic activity (kgCO2/$). This last measure depends crucially on technology, and shows how far growth has been “decoupled” from carbon emissions. If population growth and economic growth are both positive, then carbon intensity must shrink at a faster rate than the other two if we are to slash emissions sufficiently.
Pendleton also brings up the prickly question of global inequity and how that impacts Jackson’s long-term assumptions:
Jackson calculates that to reach the 450 ppm stabilization target, carbon emissions would have to fall from today’s levels at an average rate of 4.9 percent a year every year to 2050. So overall, carbon intensity has to fall enough to get emissions down by that amount and offset population and income growth. Between now and 2050, population is expected to grow at an average of 0.7 percent and Jackson first considers an extrapolation of the rate of global economic growth since 1990 – 1.4 percent a year – into the future. Thus, to reach the target, carbon intensity will have to fall at an average rate of 4.9 + 0.7 + 1.4 = 7.0 percent a year every year between now and 2050. This is about 10 times the historic rate since 1990.
Pause at this stage, and take note that if there were no further economic growth, carbon intensity would still have to fall at a rate of 4.9 + 0.7 = 5.6 percent, or about eight times the rate over the last 20 years. To his credit, Jackson acknowledges this – as he puts it, decoupling is vital, with or without growth. Decoupling will require both huge innovation and investment in energy efficiency and low-carbon energy technologies. One question, to which we’ll return later, is whether and how you can get this if there is no economic growth.But Jackson doesn’t stop there. He goes on to point out that taking historical economic growth as a basis for the future means you accept a very unequal world. If we are serious about fairness, and poor countries catching up with rich countries, then the challenge is much, much bigger. In a scenario where all countries enjoy an income comparable with the European Union average by 2050 (taking into account 2.0 percent annual growth in that average between now and 2050 as well), then the numbers for the required rate of decoupling look like this: 4.9 percent a year cut in carbon emissions + 0.7 percent a year to offset population growth + 5.6 percent a year to offset economic growth = 11.2 percent per year, or about 15 times the historical rate.
To further complicate how population figures into all this, Brian O’Neill’s Proceedings of the National Academy of Sciences article, “Global Demographic Trends and Future Carbon Emissions,” shows that urbanization and aging trends will have differential – and potentially offsetting – impacts on carbon emissions. Aging, particularly in industrialized countries, will reduce carbon emissions by up to 20 percent in the long term. On the other hand, urbanization, particularly in developing countries, could increase emissions by 25 percent.
What do you think? Is infinite growth possible? If so, how do you reconcile that with its effects on “spaceship Earth?” Do you rely on technology to improve efficiency? Do you call it a loss and hope the benefits of growth are worth it?
Sources: Political Climate, Proceedings of the National Academy of Sciences, Prosperity Without Growth (Jackson). -
Dividend or Deficit? The Economic Effects of Population Age Structure
›According to the latest projections, the global population will hit the seven billion mark later this year and perhaps nine billion by 2050. Yet, while the global population is growing, it is also aging, due to falling fertility rates and longer life expectancies. By 2050 the number of people aged 60 and over will reach two billion. At an event at the Wilson Center on April 1, Andrew Mason of the University of Hawaii at Manoa and the East-West Center and Ronald Lee of the University of California, Berkeley, discussed their research on the economic effects of an aging world with discussant Dalmer Hoskins of the Social Security Administration. [Video Below]
Changing Age Structures and Economic LifecyclesThere are three phases of age transition, Mason explained: during the first phase, high fertility rates and declining infant and child mortality rates increase the share of children in the population. In the second phase, the proportion of the working age population (those aged 15-64) increases, potentially providing a boost to production and consumption, and in the third phase, the elderly proportion increases due to lower fertility rates, decreasing production and increasing the burden on state support systems.
From 2010-2015, 85 countries are projected to witness the largest absolute increase in history of their populations aged 60 and over. This increase in elder populations is significant, Mason said, because it may mean slower economic growth.
Based on data collected through National Transfer Accounts, Mason and Lee’s economic lifecycle tracks the labor income and consumption rates of a population at a given age. In high income countries, consumption increases around the teen years as a result of investments in education, then dips slightly, and, finally, sharply rises around the age of 80 due to high health care expenditures. The consumption rate remains relatively flat in low income countries, with consumption differing the most in the older ages.
The support ratio measures the number of workers relative to the number of consumers, while taking into account age-specific variances in number of hours worked and level of consumption. Mason explained that China, after four decades of rapid growth, has reached the peak of its support ratio, with many workers relative to the number of consumers. However, China is rapidly aging, like much of Northeast Asia, and also because of its one-child policy. The resulting decline in its support ratio will likely limit its economic growth; however, Mason cautioned that it would be “rash” to say that its growth will bottom out completely.
The United States has an age structure that is “quite a bit more favorable” than other industrial countries, Mason said. Higher fertility, lower life expectancy, and a higher rate of immigration mean that aging is coming more slowly to the United States than other developed countries.
The Second Demographic Dividend: An Investment OpportunityDuring the first demographic dividend, the labor force grows more rapidly than the dependent population, thus allowing more resources to be spent on economic growth. But what happens after that? As populations age, there is a “semi-automatic” increase in investment in human, physical, or financial capital, Lee explained; for example, as fertility falls, the amount invested per child increases. This second demographic dividend, said Lee, can help somewhat offset the decline in support ratio that comes in the third phase of the age transition – aging.
One response to the increased costs of an aging population, said Lee, is to reduce consumption in proportion to the decline in the support ratio. Another option would be adding more hours to the work day or pushing the retirement age back. In the United States, Lee said that to offset the declining support ratio entirely by postponing retirement would require postponement by eight years up to 2050, and 10 years by 2085.
Brazil, Lee said, is the “world champion” of pension generosity, where pensions make up 12 percent of the GDP. The United States, by contrast, relies on asset income from physical or financial investments for about two-thirds of its retirement income. Brazil’s challenge, when it begins to feel the effects of aging (it is still relatively young), will therefore be much greater than in the United States.
A “New Lens” on Aging
Aging, Hoskins said, is not the “catastrophe” that it has been portrayed to be in the media. Supporting an aging population is “something we can plan for and handle,” he said. It is possible “to do the right thing to make sure citizens have a decent life.” The problems come when a country waits too long or does not plan at all, such as in Nigeria and the Philippines where, Hoskins said, they have very underdeveloped social protection systems and the elderly have little to no income. Mason and Lee’s analysis of the work/consumption ratio, said Hoskins, offers a “new lens” into how the world will deal with aging.
Sources: Los Angeles Times, National Transfer Accounts, UNFPA, World Bank.
Image Credits: “Elderly couple – Meiji-jingu,” courtesy of flickr user Tom Spender. Chart courtesy of Ronald Lee and Andrew Mason, National Transfer Accounts.
