The Garrulous Jay – Prisoners Of Demography?

“We’re none of us getting any younger…” So the old aphorism goes, but actually in a way it isn’t true.

A recent article in the IMF’s Finance & Development Magazine points out that, “A person who was 70 in 2022 had the same cognitive health score as a 53-year-old in 2000.” That’s an extraordinary improvement over a period of just 22 years.

It may also be the basis of a good news story that can counter of the doom-laden narrative of the demographic timebomb. This argues that birth rates are falling and longevity is increasing, accompanied by rising morbidity, leaving a shrinking working population supporting those who have retired.

As another article in the same publication concedes, “one in ten people worldwide are now over 65, and that proportion is projected to double over the next 50 years”.

But the message coming from both is that this need not be grounds for despondency as politicians wrestle with ballooning healthcare bills, unsustainable State pension costs and increasingly disenfranchised younger generations.

The key here is to recognise and exploit the opportunity presented by improvements in the health of older people. This is neatly summarised by the article that states that, “in the 20th century, we added years to life. In the 21st, we must add life to these years.”

This may not diffuse the timebomb, but it can certainly mitigate its effects. One simulation finds that a combination of narrowing cross-country gaps in the functional capacity of older people, incentivising the gradual rise in the effective retirement age and narrowing labour market gender gaps could boost global annual output growth by 0.6 percent.

There are some pretty heroic assumptions in this modelling, but it points to an escape route from the demographic prison.

None of this will be easy or cheap, but the alternatives should be sufficiently bleak for politicians to take note…and action.

The stick of a rising State pension age may be a part of the solution, but it will likely be ineffective on its own.

A broader approach is advocated which sees a shift to what is termed, “a life-course approach to health” that starts in childhood. In other words, an approach that focuses on prevention rather than cure, in which healthcare expenditure is focused on measures of life expectancy as well as medical interventions.

Improvements in medicine, including the use of AI and genetics, should complement this, and these in turn should be supported by the adaptation and provision of jobs so that they are better suited to older people.

All of this should further support the trend I already see in my conversations with clients, of individuals’ seeking to have longer and more varied working lives.

There are clear challenges to achieving this goal, including the way in which developments in AI may render may jobs redundant, but here too opportunities may emerge.

Ultimately, the solution to the demographic timebomb may not lie with unpopular and ineffective measures to encourage immigration or rising birth rates, but with those of us right here, right now.