1Eighty-five years is how long a girl born in 2017 in France can hope to live, whereas the average lifespan of women from her grandmother’s generation was only 73. [1] Rising longevity, combined with falling fertility, has greatly increased average age in developed countries. These trends, very likely to continue in the coming decades, also affect developing countries. At the scale of the globe, the United Nations forecasts that the number of people aged 60 and over will have grown from 962 million in 2000 to over 3 billion by 2100, while the world’s total population will have less than doubled. [2]
2A frequent focus of public debate, demographic ageing is currently viewed from two distinct perspectives. On the one hand, we have the business world’s enthusiasm for the “silver economy” and the opportunities it is said to represent; on the other, an alarmist message citing retirement system imbalances, inexorably rising healthcare expenses, the skyrocketing costs of old-age dependency, weaker economic growth in conjunction with lower proportions of people of working age, etc. Long is the list of “ills” that will presumably accompany the ageing of our societies. How can we reconcile this apocalyptic vision with the intuition that “gaining a longer life” is in itself a major economic and social advance?
3That question is at the heart of Grégory Ponthière’s Économie du vieillissement, published in 2017. A professor of economics at the Université Paris-Est Créteil and the Paris School of Economics, Ponthière offers a complete overview of the economic implications of ageing. He is also concerned to present the conceptual tools and empirical methods used in economics to shed light on the conditions and consequences of individual and population-wide ageing. And by highlighting that length of life is a rare and unequally distributed individual resource, he powerfully conveys the relevance of the economic approach to ageing.
4In keeping with the spirit of the “Repères” series in which the book was published, it offers an instructive and precise five-chapter presentation of the various ways ageing affects the economy and public finances. The body of the text is accessible to all readers with a general social science education. For readers trained in economics, the book also contains ten boxed insets on more technical points that involve mathematical formalizations.
5The first chapter situates the phenomena of increased life expectancy and increased proportions of older people in the total population in their social-historical context. It also critically examines the standard definition of demographic ageing and empirical measures of it. Is it accurate to classify a person who has reached a certain age as “old” when health at some ages has considerably improved? It would seem more relevant to calculate a “biological” age that takes into account the individual’s health and functional state. The indicators selected should account for the fact that the relationship between chronological age and state of health varies from one individual to the next, particularly by socioeconomic status. Some methods for measuring ageing are economic, the aim being to compare the working-age population and its productive capacity to the total population and consumption. The book also looks at statistical techniques for inferring an ageing “threshold” from the population pyramid. Paradoxically, those methods find a stable proportion of “elderly” people in France’s population as a whole from 1930 to 2000. The examples presented demonstrate how choice of demographic ageing measure influences perception of the phenomenon.
6The extremely detailed second chapter qualifies the “all else kept equal” analysis of the effect of demographic ageing on economic growth. In the first analysis, an older population has a greater share of economically inactive people, a situation that clearly diminishes per capita wealth. Ponthière qualifies the validity of that observation, explaining that it depends on the productivity-by-age profile of the given society and trends therein – an idea not unanimously accepted at either the theoretical level (knowledge obsolescence versus experience) or the empirical one. At a deeper level, he argues, the link between ageing and growth should be understood dynamically. Rising life expectancy may elicit behavioural reactions that could in turn have positive effects on growth rates by way of increased saving rates, longer working lives, or greater investment in education. Despite disagreement on the relative weight of these different mechanisms, they do provide some perspective on alarmist observations about the effect of ageing on economic growth and public finances.
7In chapter 3, the author firmly explains that the economic impact of individual and population-wide ageing cannot be reduced to its impact on economic growth. The improved human welfare reflected in increased life expectancy has economic value in and of itself. The economist Amartya Sen has shown that gross domestic product or GDP – the canonical measure of economic performance – cannot account for the economic gain represented by improved survival conditions. However, attempts to develop alternative indicators run into the fundamental question of what value individuals attach to an extra year of life compared to an income increase. The approach in terms of income equivalent monetizes increases in life expectancy, thereby making it possible to compare countries’ economic performances in terms of both GDP and inhabitant longevity. That approach leads in turn to reassessing the rising economic growth that developing countries experienced over the twentieth century as their mortality rates fell.
8Nonetheless, increased life expectancy has not meant the end of unequal lifespans – the subject of chapter 4. That manual workers are more likely than managers to die prematurely affects measurement of poverty at a given moment. Does this mean we should integrate the usual “missing poor” indicators? And should we go so far as to monetize the well-being disadvantage represented by premature death? Because rising life expectancy at the scale of an entire society affects saving and inheritance dynamics, it can also intensify income inequalities. Moreover, some public policy intervention engenders implicit resource transfers from people who die prematurely to those who live longer. This holds for retirement systems that do not take account of differential mortality and so enable individuals of high socioeconomic status to benefit longer from their retirement. Meanwhile, high replacement rates and low pension indexation would limit the redistribution sought by current policies that promote individual attainment of extremely old ages.
9In direct contrast to a healthy ageing scenario, demographic studies reveal an increase in the number of years in which older individuals have difficulty performing daily tasks. While the high financial cost of having dependent older people cared for by professionals, particularly in institutions, is clear, the economic cost of family care is also high. However, not everyone will experience dependency before dying. And despite the dependency risk, only a small proportion of dependency costs are covered by private insurance policies. This “paradox” is due to factors that have to do with private insurance demand and supply. Economic theory also has tools for modelling parent–child and sibling interactions that guide decision-making on where to live (distance from an old parent) as well as inheritance decisions. Finally, the author points out the difficulty of designing efficient and redistributive public economic policy for dependent people given the complexity of interactions between family dynamics and market mechanisms.
10One effect of the wide range of topics discussed in this book is that some points are handled quite succinctly. Still, for curious readers there is the bibliography. The decision to combine micro- and macroeconomic approaches with contributions from the theory of social justice enables Ponthière to demonstrate the great value of an economic approach to ageing and to identify what are as yet unanswered questions.
