The benefits of an ageing population

This paper

This paper scopes the current literature on the ageing population. It focuses particularly
on the facts of ageing, and what the literature considers to be some of the benefits of an
ageing population, particularly in the spheres of economics and health care.

Context and Trends

The first thing to say about an ageing population is that it has come about due to people
living longer, which is a good thing in its own right. When the pension age was set at 65, it
was envisaged that people would not live for much longer after that. Today, despite the
pension age remaining at 65, the average Scottish man and woman can expect to live to
73.8 years and 79.0 respectively a social and scientific achievement in its own right.

Speaking to the Lisbon Council on 28 September 2004, Berglind sgeirsdttir, Deputy

Secretary General of the OECD, stated:

There are few things more annoying than endlessly hearing about the burden
which population ageing is putting on society. Increased longevity and better health
are not burdens on society, they are extremely good news. Speaking of the
burden they impose will only be valid if we fail to restructure society and its
institutions to reflect these new realities. Older people offer tremendous potential
value to businesses, the economy and society. A modern social protection system
has to help society in making the necessary adjustments. In particular, longer lives
mean better opportunities to contribute to society over a longer lifetime. It offers
better possibilities to enjoy an active life over a longer period.

Along with a decline in mortality, the other main reason for an ageing population is
declining fertility. The average rate within the OECD is now 1.6 children per woman, well
below the replacement level of 2.1. A population that is living longer, combined with a
population where births are declining leads to a growing number and proportion of elderly
people.

An Ageing population is obviously not unique to Scotland. It is a global trend that is

particularly stark in Europe. Some facts and figures:

Worldwide, the population aged 60 and over is growing faster than any other age
group
The 60+ population is forecast to double to 1.2 billion by 2025
By 2050, the 60+ population is forecast to reach 2 billion, which would be the first
time in history that the over 60s outnumber those aged under 14
The ageing trend is particularly pronounced in Europe which, by 2025 will have 8 of
the 10 oldest populations ie the highest % of people over 60 among countries
worldwide with at least 10 million people
By 2050, it is estimated that 35% of the European population will be over 60
compared with 20% today
Challenges for policy makers

It has been argued that these developments require a rethink of the rigid distinctions that
define age and give it boundaries, and that we view ageing as a lifelong and society-wide
phenomenon, not a phenomenon exclusively pertaining to older people.

This.change in the worlds population parallels the magnitude of the industrial

revolution traditionally considered the most significant social and economic
breakthrough in the history of humankind since the Neolithic period From this
point onward, policies for older persons, younger persons and those in between,
must be designed with an ageing society in mind, society where soon, every third
individual will be over the age of 60. International, national and local communities
must begin now to adjust and design their infrastructures, policies, plans and
resources. (UN).

Within the OECD, Berglind sgeirsdttir points out that there are big differences in the
proportion of men and women working past the age of 50. She claims that some countries
pension systems function in a way that encourages workers to retire early. She argues:

The parameters of public pension systems need to be adjusted by, for example,
increasing the retirement age or at least making sure that people do not retire much
earlier. Here the case of Austria is interesting. Every second man aged 50 and
over retires on grounds of disability. We need, to link benefits to life expectancy,
and provide appropriate actuarial adjustments to benefits for early and late
retirement. In other words making work pay is crucial.

OECD studies show that most countries are now moving in this direction. They are
closing down pathways into early retirement embodied in pension systems and
changing the calculation of pensions in a way that ensures working longer actually
pays. But more needs to be done, even though such reforms are politically
unpopular, as we know from the recent Austrian, French and Italian reforms. Our
societies need the reforms in order to take full advantage of the great achievement
of longer life expectancy. We also need to preserve the intergenerational contract
which glues our pension systems.

There are also big differences in the proportion of women who work in OECD
countries. Only 50% have paid employment. I do believe that initiatives to better
reconcile work and family life offer a double dividend encouraging greater labour
force participation by mothers as well as influencing fertility rates. This is even
more important since on average across OECD more women than men are now
graduating with a tertiary education degree. That it is difficult to reconcile work and
family can be illustrated through the fact that 40 per cent of Swiss women with a
tertiary degree have no children.

Ageing populations also reinforce the importance of lifelong learning. Currently, the
incidence of training for older workers is in general much lower than it is for middle aged
workers. Efforts to encourage people to work longer must be combined with effective
employment services for older jobseekers. These kind of arguments are made in the work
of Jim McCormick of the Scottish Council Foundation (2004), and the OECD (2005, p6)
who argue that in the face of population ageing, it is vital to improve labour market
retention and hiring prospects for the over- 50s.

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The benefits of an ageing population

A study into The Benefits of an Ageing Population has been carried out by Judith Healy
of the Australian National University. Basing her work on the situation in Australia, she
argues that there are many benefits and new opportunities emerging from an ageing
population. Specifically

On Healthcare

An ageing population does not necessarily mean a sicker population burdening the
public finances with health care demands
The baby boomer generation is projected to be healthier, more active and more
productive than preceding generations
Advances in medical science and easier access to improved therapies will lesson
the burden of disease amongst older people
On average, over one quarter of ill health care costs over a lifetime are attributable
to the last year of life but the cost of the last year does not rise with age if
anything, she argues, it appears to fall

On the Economy

The baby boomer generation is, generally, wealthier than the previous generation of
retirees, largely due to the higher rates of home ownership
Older workers today have a growing capacity than previous generations to work
beyond a retirement age of 65 as they are healthier and better educated , and the
nature of work in a modern economy is less physically demanding than it has been
in the past

Wider benefits

Wealthier retirees may be attracted to the voluntary sector, and are more likely to be
involved in community activities
Grand-parenting has been shown to benefit the grand-children
It is likely that older communities will be more law abiding, since older people are
statistically less inclined to commit crimes against property and people
Older people are also more likely to attend musical concerts, theatres and art
galleries than younger people thus it is likely that the arts will benefit from ageing
communities
Studies show that satisfaction with life increases as we get older

An ageing population will also ultimately result in a declining population. Population growth
has been a norm since the 18 th century, and many people have taken continued population
growth and its (supposed) merits for granted. However, by the end of this century, it is
possible that the global population will be falling.

While population decline brings the problems that have been mentioned, in the media and
elsewhere of a declining workforce and GDP, modest population decline, over time, could
also have advantages. Specifically, David Coleman (2004) of the University of Oxford has
argued

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 Problems of overcrowding and congestion would be ameliorated, making the
environment more protected
Unsatisfactory infrastructure, like city housing hastily constructed to cope with
growth can be demolished
Labour shortages might reduce unemployment, poverty and inequality through
higher wages, and promote capital substitution and labour productivity as wages
rise
Although overall GDP may fall, GDP per capita may rise

Governments have not always sought to grow their populations. In the UK, the Royal
Commission on Population (1949) and the later Population Panel in 1973 both felt that an
end to population growth would moderate problems of food imports and balance of
payments. Indeed the Government Population Panel of 1973 stated that "Britain must face
the fact that its population cannot go on increasing indefinitely" and called on the
government to "define its attitude to questions concerning the level and rate of increase of
population. The Netherlands has long considered itself to be over-populated and up to the
1950s, as in the UK, it sought to encourage emigration to ease population pressures. In
the US, the Commission on Population Growth and the American Future (1972) saw an
end to US population growth, although not a decline, as on balance, advantageous.
Indeed, on environmental grounds, the prospect of population decline is usually welcomed
(from Coleman 2004).

Other work on Ageing

The Economic and Social Research Council (ESRC) is currently undertaking work on the
implications of an ageing population. The ESRCs Annual Debates this year focus on
Ageing Britain and the issues this raises. To tie in with this, ESRC has set up a discussion
forum where people can contribute views and opinions on the topic. It has also arranged
for a debate on the implications of ageing to be held at the Centre for Contemporary Arts in
Glasgow on 6 December 2005, between 6.00pm and 8.30pm, with the following remit:

AGEING BRITAIN: SHADES OF GREY

As the number of those over 65 continues to increase and we enjoy much
better health than our predecessors, what challenges does this pose for our
society?
By 2025 the number of people in Britain over the age of 60 will outnumber those
under 25. What challenges does this pose for our society?
Is it too late to head off a pension crisis?
How deeply ingrained is age discrimination in our society?
Can society better tap into the resources of experience and knowledge that
older people offer?
Is there adequate and appropriate care for the elderly?
How can we ensure compassion in end of life care, and dignity in death?

The Centre for Policy on Ageing (CPA) carries out work which is primarily directed towards
informing and influencing service providers, with its approach being to discover and
advocate what older people themselves want and need. CPA, as an independent centre of
research and reference, aims to:
formulate and encourage social policies which will enable everyone to live life in
older age as fully as possible

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 promote informed debate about issues affecting older age groups
stimulate awareness of the needs of older people and encourage the spread of
good practice

Its policy and research department is responsible for developing its policies.

Community Service Volunteers in Scotland has conducted some work looking at the
experience of a typical group of retired active volunteers engaged in health and
development projects. The study indicates that older people enjoy volunteering and that it
gives them a sense of purpose and shape to life. It concludes that the retired and senior
volunteer programme provides useful services to the community and improves the quality
of life of the volunteers.

The National Audit Office has carried out a study entitled Welfare to work: tackling the
barriers to the employment of older people. This study considers the employment position
of older people and the benefits to the UK economy of an economically active older
population. It makes the point that there are individual and business benefits from the
employment of older people. For many, being out of work can result in poverty, insecurity
and social exclusion; working can help combat these. Benefits for employers arise, for
example, from the reliability of older workers which can lead to lower staff turnover, greater
productivity and skills retention. It is estimated that the relatively lower level of employment
among older workers costs the economy 19-31 billion a year in lost output and taxes
and increased welfare payments.

A study for the think-tank Catalyst (2004) concludes that the fears of a demographic time-
bomb are overstated.

For over 20 years anxieties have been growing in all industrialised economies that
ageing populations threaten our collective futures. Some worry about the damaging
impact on economic growth. Others that the growing numbers of older people will
bankrupt pension, health and other welfare support systems for the elderly. Some
fear even worse consequences, with democratic society falling apart as inter-
generational conflict becomes the new "class war". In April 2002 a United Nations
conference in Madrid summed up this darkening mood when it debated the
possibility that the greatest threat to the quality of life in developed countries more
than war, disease and natural disaster is the ageing of their populations.

The Catalyst report argues that these demographic concerns are greatly exaggerated.
Moreover it rejects the logic that the human success story of longer lives is turned into a
problem. However, they do admit that action needs to be taken to deal with the
implications of changing age structures in society. They argue that we need to encourage
policy makers to make it possible for older people to lead active and independent lives
longer, and remove any social and institutional barriers which prevent them from doing so.

Brainstorming

In the spirit of Futures thinking, I had a brainstorm session with colleagues in SPICe to
consider what some of the potential benefits of an ageing population may be. Comments
made included:

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Problems reduced

Crime
Dieing young / being widowed young
Shortage of baby sitters/child minders/volunteers/playing fields
Cost of educating young people
Rush hour traffic congestion
Lack of affordable housing

Problems increased

Paying for pensions/health care

Shortage of bungalows
Shortage of recruits for the military
Greater reluctance to innovate or accept change

But problems increased by less than expected

Paying for pensions - don't pay generous pensions/benefits so early and people will
carry on working longer
Paying for health care - don't provide expensive health care to the non working and
people will carry on working longer
Bungalows - poorer pensioners will sell their bungalows and move into flats
Military recruits greater reliance on technology will reduce the need for personnel

Specifically with regards to environmental benefits, immediate thoughts are:

Targets to reduce fuel poverty in elderly people may see better energy efficiency,
and so less energy use and emissions
Increased use of public transport, either through concession cards or necessity =
less emissions and congestion
Is it appropriate to suggest that older people develop a different perspective on
some environmental matters eg use of shopping bags rather than plastic bags as
thats what they are used to? Perhaps this mindset will lessen in the future as
people are used to a more throwaway society
Same goes for things like, hand-washing clothes - older people may do now, will
they in the future?
Early retirement, perhaps opens up opportunities for volunteering - in environment
and elsewhere

Other ideas included:

Maybe healthy old people can provide good role models for healthy lifestyles (if
thats one of the reasons why theyve survived longer)
If the overall ratio of adults to children is greater, there is an opportunity for more
nurturing of children and more adult time put into their care and development
(childcare, coaching, teaching support etc)

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 There may be greater opportunity for more varied and satisfying careers over a
longer healthy lifespan eg women may have time to bring up children and then
go onto a longish career. Captains of industry can achieve what they want to, and
then use their experience elsewhere eg teaching etc
Older people may develop more articulate and effective consumer power,
effectively being in the vanguard of driving up consumer standards to the benefit of
all consumers
Older people may be able to develop methods of working smarter rather than
harder, possibly having a more reliable and mature attitude to work
An older population will have beneficial impacts on a variety of economic sectors
(eg various care and health services, travel and transport services etc)
Older people may be more involved in campaigning and volunteering
(environmental impact?)

Other thoughts stemming from this brainstorm included:

Reduced aggression, violence??? Reclaiming town centres at night???

More lifetime experience and wisdom will make a positive contribution to the
political process, and possibly encourage a more stable society?

Capital stock and wealth may lead to more investment opportunities and business
angels.

Ross Burnside
Senior Research Specialist SPICe

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Sources

Alliance for Health and the Future. Facts and Figures. An Ageing Population: the
European Facts and Figures. Available at:
http://www.healthandfuture.org/about_us/facts_and_figures/index.html

sgeirsdttir, Berglind (2004). What does the future hold? Demography, Jobs and Public
Finances. Talk to the Lisbon Council, Brussels (28 September 2004). Available at:
http://www.oecd.org/dataoecd/14/39/33793242.doc

Catalyst (2002) The Challenge of longer life: economic burden or social opportunity.
Available at:
http://www.catalystforum.org.uk/pubs/pub6.html

Coleman, David (2004). Europe at the cross-roads must Europes population and
workforce depend on new migration? Oxford Centre for Population Studies: Working
Paper Series no 21. Available at:
http://www.apsoc.ox.ac.uk/Oxpop/publications%20files/WP21.pdf

Community Service Volunteers (2004). Retire into action: a study of the benefits of
volunteering to older people. Edinburgh: Community Service Volunteers.

Economic and Social Research Council information on its work on the Ageing Society.
Available at:
http://www.esrc.ac.uk/ESRCInfoCentre/about/CI/CP/Our_Society_Today/ageing/index.asp
x?ComponentId=13140&SourcePageId=5433#0

Healy, Judith (2004). The Benefits of an Ageing Population. The Australia Institute.
Available at:
http://www.tai.org.au/Publications_Files/DP_Files/DP63%20summary.pdf

House of Lords Select Committee on Economic Affairs (2003). Aspects of the Economics
of an Ageing Population. London: House of Lords. Available at:
http://www.publications.parliament.uk/pa/ld200203/ldselect/ldeconaf/179/179.pdf

House of Lords Select Committee (2004) Government response to Aspects of the

Economics of an Ageing Population. London: House of Lords. Available at:
http://www.publications.parliament.uk/pa/ld200304/ldselect/ldeconaf/129/129.pdf

McCormick, Jim (2004). Healthy Ageing: A whole-life agenda. Edinburgh: Scottish Council
Foundation.

National Audit Office (2004). Welfare to work: tackling the barriers to the employment of
older people. London: National Audit Office. Available at:
http://www.nao.org.uk/pn/03-04/03041026.htm

OECD (2005). Ageing populations: high time for action. Meeting of G8 Employment
and Labour Ministers, London, 10-11 March 2005. Available at:
http://www.oecd.org/dataoecd/61/50/34600619.pdf

Population Reference Bureau (2005). 2005 World Population Datasheet. Available at:
http://www.prb.org/pdf05/05WorldDataSheet_Eng.pdf

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United Nations Division for Social Policy and Development. Implications of an Ageing
Society. Available at:
http://www.un.org/esa/socdev/ageing/ageing/ageimpl.htm