{"id":1269,"date":"2016-08-31T22:55:19","date_gmt":"2016-09-01T05:55:19","guid":{"rendered":"http:\/\/www.annefocke.net\/?p=1269"},"modified":"2016-09-01T12:10:40","modified_gmt":"2016-09-01T19:10:40","slug":"aging-economics-a-simple-equation","status":"publish","type":"post","link":"http:\/\/www.annefocke.net\/?p=1269","title":{"rendered":"Aging & economics: a simple equation"},"content":{"rendered":"

“Are aging and the economic slowdown linked?”<\/span><\/p>\n

A news article forwarded by a friend carried this headline. Without reading the piece, the headline immediately reminded me of a story\u00a0I\u2019ve tossed around informally for some time.\u00a0I tend to pull\u00a0it out in conversation whenever I or someone else in my general age bracket expresses concern about whether or not our money will last as long as our lives will.<\/p>\n

As an equation, it might look like this:<\/p>\n

\"My<\/p>\n

I’ve never expressed it quite this way before,\u00a0but\u00a0here\u2019s how I tell\u00a0the story:<\/p>\n

Using round numbers, I say, imagine that I started earning my own living at age 20. I was actually older than that, but it\u2019s close enough and saying I was 20 makes the\u00a0equation easy to figure out. Then suppose that I decided to stop working for pay at the societally-assumed \u201cretirement age\u201d of 65. I didn\u2019t, but again I\u2019m not quibbling about details. The kicker comes when we add the final assumption, that I might live to be 90. The average life expectancy for a woman my age has been going up and is currently about 86.5 years \u2013 again, the number is close enough for the purpose of my storytelling.<\/p>\n

The simple arithmetic of the story suggests a conclusion.<\/p>\n

Someone living according to my equation would have an earning life of 45 years \u2013 just half of a full 90-year lifetime. Hmmm . . . that seems to imply we\u2019d have 45 years to generate 90 years of living expenses, two years\u2019 worth for every year worked. Applied to real life, the equation seems crazy.\u00a0The equation is all too simple, I know, since it doesn\u2019t account for many things. Obviously, it\u00a0works well now for a certain segment\u00a0of the population. For many others, though, the economic life it points to is difficult if not impossible, and on the scale of an entire society, it\u2019s hard to believe that\u00a0the formula could possibly work.<\/p>\n

My\u00a0equation comes from thinking about the connection between aging and economics in the life of an individual, that is, it\u2019s focused on the \u201ceconomic slowdown\u201d (or steep decline) in the lives of many older people. The news story I started with, on the other hand, considers the slowdown in the economy as a whole, a slowdown that a new academic study traces to our aging population. Written by Robert J. Samuelson for the Washington Post<\/em>, the article begins with this sentence:<\/p>\n

“An aging United States reduces the economy\u2019s growth \u2013 big time.”<\/span><\/p>\n

The study, out of the Harvard Medical School and the Rand Corp., a think tank, claims that: \u201cThe fraction of the United States population age 60 and over will increase by 21% between 2010 and 2020.\u201d Then, Samuelson reports, the study\u00a0estimates that this aging cuts the economy’s current\u00a0annual growth by\u00a01.2%, which\u00a0is approximately the difference between the growth rate from the 1950s to 2007 (about 3% per year) and the rate of growth since 2010 (about 2% annually). This leads Samuelson to conclude, \u201cIf other economists confirm the study, we\u2019d probably resolve the ferocious debate about what caused the economic showdown. The aging effect would dwarf other alleged causes\u2026\u201d<\/p>\n

Samuelson discusses reasons for why an increasingly older\u00a0population would reduce economic productivity. It’s partly because there are relatively fewer workers left to support production, but that accounts for only about a third\u00a0of the slowdown, according to the study. One theory for the rest, Samuelson\u00a0says, is that older societies may be more cautious with their spending, valuing stability and being more restrained, less experimental and optimistic. On this point, my equation would suggest their “cautious spending” is\u00a0not necessarily\u00a0about their sense of adventure but rather\u00a0about their pocketbooks.<\/p>\n

\u00ab\u00ab\u00ab\u00ab\u00ab\u00ab\u2022\u00bb\u00bb\u00bb\u00bb\u00bb\u00bb<\/strong><\/span><\/p>\n

You’ll find the Washington Post\u00a0<\/em>article, which appeared in the August 21, 2016 issue,\u00a0here<\/a>.<\/p>\n

\n

\"cropped-9099-Logo-red_D-nick-squared.jpg\"<\/p>\n","protected":false},"excerpt":{"rendered":"

“Are aging and the economic slowdown linked?” A news article forwarded by a friend carried this headline. Without reading the piece, the headline immediately reminded me of a story\u00a0I\u2019ve tossed around informally for some time.\u00a0I tend to pull\u00a0it out in conversation whenever I or someone else in my general age bracket expresses concern about whether…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[2,3],"tags":[],"class_list":["post-1269","post","type-post","status-publish","format-standard","hentry","category-whats-work","category-eighth-decade"],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p7pXN0-kt","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"http:\/\/www.annefocke.net\/index.php?rest_route=\/wp\/v2\/posts\/1269","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.annefocke.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.annefocke.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.annefocke.net\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.annefocke.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1269"}],"version-history":[{"count":10,"href":"http:\/\/www.annefocke.net\/index.php?rest_route=\/wp\/v2\/posts\/1269\/revisions"}],"predecessor-version":[{"id":1298,"href":"http:\/\/www.annefocke.net\/index.php?rest_route=\/wp\/v2\/posts\/1269\/revisions\/1298"}],"wp:attachment":[{"href":"http:\/\/www.annefocke.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1269"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.annefocke.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1269"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.annefocke.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1269"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}