The Growing Elderly Population
Survival of the fitter?

The proportion of the UK population over 65 years old is now 15%, compared to 11% in 1951 and 5% in 1911. In addition, many more now survive into their eighties and nineties. This phenomenon is widely discussed, almost invariably as a serious problem or 'burden'. Over the coming decades, it is argued, a shrinking working population will be obliged to finance the pensions, health care and other services required by the burgeoning elderly population. At a lunchtime meeting on 23 February, Pat Thane argued that the tone of this debate has been excessively gloomy. Future generations of the elderly, born in the postwar period, will be fitter, more independent, and able to contribute to the economy to even later ages. It is difficult to predict how they will fare but they are not necessarily doomed to misery, Thane concluded.

Pat Thane is a Senior lecturer in Social Science and Administration at Goldsmiths College, London, and a Research Fellow in the Centre's research programme in Human Resources since 1900. This talk was one of the series organized jointly with the British Society for Population Studies (BSPS) and was sponsored by the Central Statistical Office.

Citing the work of CEPR Research Fellows John Ermisch and Jay Winter, Thane noted that the proportion of the UK population over pensionable age will remain more or less constant over the next twenty years, giving a respite in which to acquire knowledge and formulate policies. Not until the next century will the proportion of the elderly begin to grow again, to 20% by 2025, (assuming that fertility remains low and life expectancy continues to improve). Although the age structure of the UK population is at present stable, some changes will occur: more of those of working age will be over 40 and the proportion of the very old will continue to rise.

Much existing work on changing age structure focuses on its implications for the ratio of 'dependants' to those of working age. The increasing numbers of the elderly, it is argued, make the greatest demands on social and medical services. According to Thane, however, the overall 'dependency ratio' has changed very little. The two main dependent age groups (i.e. those under 15 and over 65) together have comprised between 33% and 38% of the UK population throughout the postwar period and will remain in this range at least up to 2025. To some degree, therefore, any increase in costly medical and other care for the elderly should be offset by reduced demand for health and educational services from the young. In addition, most forecasts of the rising 'burden' of an ageing population are based simply on the ratio between those over and under 65 years old. This is misleading, Thane argued, since many of those over pensionable age are economically independent, whereas an increasing number of households of working age are dependent on welfare benefits.

The predominant pessimism about the economic effects of an ageing population is based on a failure to distinguish the natural and inevitable characteristics of old age from the specific experiences of the cohorts born in the period 1900-20, Thane argued. There is considerable evidence that the health, economic circumstances and independence of the elderly are strongly affected by their experiences and expectations over their whole lifetime. It is therefore incorrect to assume that the circumstances and needs of today's elderly will be reproduced in generations born in the postwar period.

The economic circumstances of the elderly should improve, as more of them will be houseowners and holders of occupational pensions. In 1985 47% of household heads over 65 were owner-occupiers; among those aged 30-59 the rate of owner-occupation was 65%. (CEPR Research Fellows Richard Wall and Mike Murphy are currently investigating changes in the residential independence of the elderly throughout Europe.) In 1973 60% of men over 55 in full- time employment belonged to an occupational pension scheme. By 1983 this proportion had risen to around 75%. One important reason why so many of today's elderly are poor (about 40%) is that 60% of those over 65 are women, who have had access to fewer economic resources over their lifetimes. As income inequalities between men and women narrow, and as more women hold occupational pensions, we may expect more women to be economically independent to later ages. On the other hand, more of the elderly will have suffered a substantial period of unemployment, and for many this will have precipitated early retirement and a further depletion of their material assets. It is possible, Thane suggested, that 'two nations' may emerge among the elderly.

The elderly are not inevitably unhealthy, Thane argued. The fact that over half of hospital beds are now occupied by those over 75 is testimony to the great improvements in the health of the 'young elderly' in recent decades. Current gerontological research indicates that future generations, having grown up in wealthier and healthier environments, will stay fit and independent to even later ages, and further improvement is possible. There is strong evidence, including that assembled by CEPR Research Fellow Nick Bosanquet, that in a supportive environment people can remain independent of very expensive institutional and professional care to late ages. By far the most important source of such support is the family. Among future generations of the elderly more will have married and had children than their predecessors, and this may increase the amount of support available from their families, although the net effect of higher divorce and remarriage rates is ambiguous.

Thane argued that conventional calculations of the elderly's demands on society are also wrong to ignore the wide range of contributions they make to the economy, although CEPR Research Fellow Paul Johnson is currently engaged research in this area. A large number of fit 'young elderly', particularly women, provide services both for the very old and for those active in the labour force, including many tasks which would otherwise fall upon the health and social services. A recent analysis of the 1980 General Household Survey suggests that elderly men also provide such services to a greater extent than has been assumed. Just as the unpaid work of women of all ages needs to be treated as a productive economic input, we should also take account of the economic contributions of the elderly if we are to assess whether they are a net 'burden' on society. Many also continue in paid employment after retirement age, particularly on a part- time basis.

The belief that competence in most tasks declines steeply with age is seriously exaggerated, Thane argued. She cited evidence that many tasks can be performed as well by people in their seventies as by younger people, even when they involve quite heavy physical or intellectual demands. Most skills can be maintained given practice; losses in speed and agility are offset by greater experience, concentration and motivation; and anyway most workers have under-used capacity for work which can be called upon at later ages. The tendency in some quarters to search for ways to reduce the retirement age may therefore be quite mistaken, Thane suggested, although it is reasonable to expect the elderly to prefer less stressful and perhaps part-time employment. The issue is how older people can contribute to an economy which seems unlikely to run at full capacity in the foreseeable future. One fruitful avenue for this could be more systematic development of certain local experiments in voluntary service to the very old. Such voluntary work appears attractive to many of the young elderly and enables those still older to remain independent of costly institutional services for longer. Thane urged that the breathing space provided by a period of relatively stable demographic structure should be used to explore ways to make better use of the considerable skills and resources of older people.

Some members of the audience challenged Thane's optimism about the health and independence of future generations of the elderly. It was pointed out that evidence of continuing capacity for work in old age was by no means conclusive. In addition, improved health may be at the cost of more intensive medical care, as expectations grow of what conditions can be treated or prevented. There were also considerable obstacles to a more flexible attitude to retirement, not least that people plan to receive pensions at a set age, and that the size of pensions depends on the level of contributions right up to that age.