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Aging Population Isn’t the Timebomb Many Make It Out to Be

November 22, 2013 • United States, Daily Email Recap

Aging Population Isn’t the Timebomb Many Make It Out to Be
See: http://blogs.wsj.com/economics/2013/11/12/aging-population-isnt-the-timebomb-many-make-it-out-to-be/

Link to Research Published in British Medical Journal:
http://www.bmj.com/content/347/bmj.f6598

It’s long been conventional wisdom among economists and policy makers that most developed economies and some developing economies face a demographic crisis in the decades ahead, as the rising cost of providing pensions and health care for a growing cadre of older people overwhelms the capacity of a shrinking cadre of workers to generate the necessary resources.

But a paper published Tuesday by the British Medical Journal challenges that orthodoxy, and says that measured properly, the age dependency ratio is lower and falling in many countries. As the paper’s title puts it, population aging is “the timebomb that isn’t.”

Jeroen Spijker and John McInnes of the University of Edinburgh argue that the current way of calculating the age dependency ratio is “a poor measure of the burden of an aging population.”

That standard measure takes the number of people who have reached the state pension age and divides it by the number of people aged 16 to 64 years of age to calculate how many potential workers are available to provide resources for each person who is no longer working.

But the two authors question the usefulness of both of those terms. They argue that what is important in determining how much support people will need is their remaining life expectancy, not how old they are. They point out that relative to remaining life expectancy, populations are actually growing younger, not older, and the number of people working after the state pension age is rising.

To read the full blog, please click here: http://blogs.wsj.com/economics/2013/11/12/aging-population-isnt-the-timebomb-many-make-it-out-to-be/


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