How an aging population could be tonic for the economy

Paul Irving, president of the Milken Institute

Paul Irving, president of the Milken Institute

Economists worry about something called the economic dependency ratio – the number of people over age 65 to 100 working age people. The U.S. Census Bureau projects that the ratio will jump sharply in the years ahead as the population gets grayer – from 22 in 2010 to 35 in 2030.

The total dependency ratio, which also includes children, won’t rise nearly that quickly, but politicians and policymakers often marshal the elderly dependence figures to conjure all manner of economic doomsday forecasts – soaring budget deficits, the collapse of Social Security and Medicare. You’d think we’re headed for block-to-block intergenerational warfare raging in our streets.

Those scenarios aren’t likely to occur, but there are reasons for concern. We do face a retirement security crisis prompted by low saving rates and the decline of traditional pensions. Health care costs could start to soar again. Demand for long-term support and services may explode.

But what if we could change the math? Paul Irving argues that we can – and must – view aging as a huge potential opportunity – not a burden – in a fascinating new volume called The Upside of Aging: How Long Life is Changing the World of Health, Work, Innovation, Policy and Purpose (Wiley, April 2014).

upside of agingIrving is president of the Milken Institute, the nonpartisan think tank focused on public health, medical research, economics and financial markets. The book is a compilation of essays by Irving and other experts on the tie-ins between aging and health, social entrepreneurship, labor markets, technology and marketing.

Irving acknowledges that there are reasons to be concerned about the aging population here in the U.S. and globally. “It’s not that aging doesn’t pose some major challenges to overcome,” he says. “But so often the framing is negative, but there are some very positive potential outcomes of an aging society.”

That starts by viewing rising longevity as a gift, not a problem. Average life expectancy in 2030 will be 10 years greater than it was in 1980, Irving notes. That presents an opportunity for people have longer productive working lives, and it also will drive economic growth as new products and services are launched to serve an older population.

Learn more in my column today at Reuters Money.