Population ageing is today’s dominant demographic trend. Never before have such large numbers of people reached the older ages (65+). It took the world over 99% of human history, until roughly the year 1800, to reach a population of 1 billion people of all ages; and now, atop the nearly 800 million extant older people, the United Nations projects that 1 billion more older people will be added in the next 34 years (United Nations 2022).
In 1960, there were more than seven times as many children younger than 15 in the world as people aged 65 and over, a ratio that is now below three-to-one (Ataguba et al. 2021, United Nations 2022). This decline reflects the combined effects of three forces: (1) falling fertility, as the world’s total fertility rate has halved since 1960, dropping from 4.7 to 2.3 children; (2) increasing longevity, as global life expectancy has increased by more than two decades since 1960; and (3) the progression of large-sized cohorts to older ages, as the massive baby boom cohorts born after the end of WWII are now reaching their mid-60s.
Population ageing embodies a multiplicity of downside risks pertaining to macroeconomic performance, fiscal balance, household wealth, and healthcare provision. If large-sized cohorts of workers reach pensionable age and retire en masse, will there be enough prime-age workers to keep the economy running at scale and pay the pensions of the swelling numbers of retirees? Older people’s labour market behaviour may also have sizable ramifications for household budgets, including those of their children. In cultures in which an appreciable portion of childcare is provided by grandparents, an extension of older people’s working lives could strain their children’s finances with the added expense of market childcare. Conversely, a surge in retirement could catapult retirees’ children into caregiver roles, with corresponding losses of output and income.
In pay-as-you go health and social security systems, fiscal stress will likely result from increases in the ratios of older people and of retirees to prime-age workers. Health systems will face growing pressure as population ageing increases the numbers of older people and as the increasing longevity of older people extends the nature of the health care required and the time period during which that care is required. The diseases of old age – including cardiovascular disease, cancer, chronic obstructive respiratory disease, diabetes, and Alzheimer’s disease and related dementias—are very expensive to treat both medically and also including the need for formal and informal care . One recent estimate indicates that the value of lost production due to non-communicable diseases will amount annually to 3–10% of GDP in high-income countries, an indisputably sizable burden (Bloom 2019).
Perhaps the biggest source of uncertainty regarding population ageing is the quality of the additional years that more and more people will live. Will increased longevity translate into more years of morbidity, dependency, and loneliness? Or will our additional years be meaningful and engaged, supported by physical and mental robustness?
Population ageing has potentially important implications for economic performance. Yet experience has demonstrated that demography is not destiny. While the world population was doubling over the last five decades, many dire predictions were made. The reality is that global income per capita more than doubled during that time, infant mortality declined by 70%, primary and secondary school enrollment rates both jumped, and the share of the world population living below the absolute poverty line of roughly two international dollars per day declined from nearly one half to under one tenth. These impressive advances in living standards were the product of human resourcefulness and adaptation – including technological innovation, institutional reforms, and investments in health, education, and infrastructure.
The same playbook that was used to address rapid population growth can also be brought to bear to address population ageing’s myriad challenges. Thoughtful preparedness could enable us to go beyond simply adding years to life and also add life to years.
Attainable goals for demographic preparedness include labour market reforms to cultivate and realise people’s full productive potential and preferences, health system and behavioural adaptations to prepare for an ageing patient base, infrastructure investments to encourage older people’s participation in society, and the development and adoption of technological innovations in support of healthy ageing.
Insofar as it holds the promise of reduced healthcare costs, and of continued independence and more meaningful and active lives for older people, healthy ageing is a supremely important goal. To achieve healthy ageing, behavioural changes are required throughout the lifecycle, and not least in the domain of physical activity. The World Health Organization calls for 150–300 minutes of moderate aerobic physical activity per week for adults, a standard that one in four adults fails to meet worldwide (WHO 2020). Proposed initiatives to reduce this shortfall include a coalition of schools, communities, workplaces, health systems, and governments providing safe spaces and incentivizing physical activity. Behavioural changes to promote healthy ageing should also centre on encouraging healthier diets (low in sugar, sodium, saturated fat, and caloric content) and reducing consumption of tobacco and unsafe consumption of alcohol.
Technological innovation also holds great potential to accelerate the achievement of healthy ageing. One key form of innovation involves the development and use of safe and effective vaccines. Vaccination is especially consequential among the elderly, who are particularly vulnerable to diseases such as influenza, shingles, pneumonia, RSV, and COVID-19. Along with vaccination, greater use of wearable health monitoring devices and more widespread and frequent hypertension and glucose screening are examples of approaches that focus on cost-effective and cost-beneficial approaches to prevention and early detection. Such approaches provide concrete illustrations of Benjamin Franklin’s old adage that “an ounce of prevention is worth a pound of cure”.
An especially auspicious technological innovation is transcatheter aortic valve replacement (TAVR), which has emerged in recent years as a treatment alternative for aortic stenosis (AS), a common and lethal heart disease. TAVR’s minimal invasiveness has significantly increased treatment rates, but economic evaluations routinely and inappropriately omit this benefit. A research team led by JP Sevilla recently evaluated the use of TAVR among elderly US patients with severe symptomatic AS: its payer perspective cost-utility analysis netted $212,199 in monetary benefits per patient, while its societal perspective cost-benefit analysis indicated $50,530 per patient (Sevilla et al. 2022). Unless medically contraindicated, TAVR is the economically optimal treatment choice for AS – relative to both surgical valve replacement and medical management – and is emblematic of the potential for technology to transform healthcare treatment, delivery, and costs. Notwithstanding the study’s US focus, there would appear to be very high and attractive net benefits associated with transformative innovations like TAVR in different country settings.
An ageing populace also presages an increase in long-term care needs. A recent study of data from 30 countries estimated an increase in long-term care demand of 47% from 2020–2040 (Kotschy and Bloom 2022), making expanded training of geriatric care personnel an imperative.
Population ageing raises the spectre of labour force shortages and consequent fiscal pressures on pay-as-you-go social security systems, but investments in healthy ageing may forestall these risks. By maintaining older people’s physical and mental capacities, these investments can give many older people the option, and even promote a desire, to extend their working lives. This calls for policymakers to build flexibility into retirement decision-making. Technology can potentially support this process by reducing on-the-job physical strains, thereby making some jobs more accessible to older workers and highlighting the need for coordination between labour market and health policies in seeking to cope with population ageing.
Thoughtful infrastructure investments are required to build communities in which more numerous older people can contribute to society, receive healthcare, and lead autonomous, socially connected lives. Expanded public transportation access, a denser network of public toilets, and infrastructure for driverless cars would all make public spaces more hospitable to older people while potentially reducing their dependence on caregivers. These are practical, humane steps that can help fight the difficult problem of ageism.
Valuing the contributions of older people
The economic case for an ambitious programme of demographic preparedness to respond to population ageing is strong. For policymakers to take appropriate action, the frameworks they use to assess different health technologies must accurately value the contributions of healthier older people to our societies and economies. Unfortunately, policymakers typically have a blind spot when it comes to the flood of downstream value that health confers. This blind spot – which hides benefits associated with elevated levels of labour force participation, hours worked, productivity, and social equity – has been very consequential for population health. By neglecting to focus on the full societal benefits of health, policymakers throughout the world have given short shrift to health spending and innovation. This leaves countries relatively ill-prepared for everything from natural disasters and climate change to pandemic diseases and population ageing.
The productive contributions that older adults make to society must be accounted for properly. Even when older people are not working for pay, they often engage in non-market activities that create value, such as caring for grandchildren, undertaking volunteer work like staffing electoral stations, or working around the house (Bloom et al. 2020a). Examining time use data for the US and 23 European countries, several co-authors and I recently found that neglecting the value of productive non-market activities leads us to undervalue by roughly half the economic contribution of older people (Bloom et al. 2020b). Health technology assessments also risk undervaluing the increased non-market contributions that result from improved treatment options. As policymakers seek ways to best utilise the talents and strengths of older people, they cannot afford to miscalculate the numerous economic contributions older people already make.
In the coming decades, the world will be increasingly preoccupied with addressing the challenges of population ageing. Policy preparedness for this demographic reality implies greater attention to initiatives that facilitate disease prevention and early detection, wider reliance on innovative health care technologies, retirement and pension flexibility, development of age-friendly public spaces, strengthened long-term care systems, and health spending based on more appropriately designed and rigorously implemented health technology assessments. These adaptations are already providing reliable evidence that healthy ageing promotes healthy economies, and there is surely more to come.
Ataguba J E, D E Bloom and A J Scott (2021), “A Global Institution for an Aging World”, Project Syndicate, 3 October.
Bloom, D E (eds) (2019), Live Long and Prosper? The Economics of Ageing Populations, CEPR Press.
Bloom D E, A Khoury, E Algur and J P Sevilla (2020a), "It’s time we stopped undervaluing older adults", World Economic Forum.
Bloom D E, A Khoury, E Algur and J P Sevilla (2020b), "Valuing Productive Non-market Activities of Older Adults in Europe and the US", De Economist 168(2): 153-181.
Kotschy, R and D E Bloom (2002), “A Comparative Perspective on Long-Term Care Systems”, CEPR Discussion Paper 17213.
Sevilla J P, J M Klusty, S Younghwan, J Mark, M J Russo, CA Thompson, X Jiao, S J Clancy and D E Bloom (2022), “Cost-utility and cost-benefit analysis of TAVR availability in the US severe symptomatic aortic stenosis patient population”, Journal of Medical Economics 25(1): 1051-1060.
World Health Organization (2020), “WHO Fact Sheet: Physical Activity.”
United Nations (2022), World Population Prospects 2022, Online Edition, Department of Economic and Social Affairs, Population Division.