Our members Alec Waugh and Hilary Vautier have reviewed the ‘The Economist’ article “The Age Invaders‘.   As well as being an overall review of how aging will affect economies in the future, it raises some interesting questions including:-

“The received wisdom is that a larger proportion of old people means slower growth and, because the old need to draw down their wealth to live, less saving; that leads to higher interest rates and falling asset prices. Some economists are more sanguine, arguing that people will adapt and work longer, rendering moot measures of dependency which assume no one works after the age of 65…

Perhaps most important, better education leads to higher productivity at any age. For all these reasons, a growing group of highly educated older folk could increase productivity, offsetting much of the effect of a smaller workforce.Evidence on both sides of the Atlantic bears this out. A clutch of recent studies suggests that older workers are disproportionately more productive—as you would expect if they are disproportionately better educated…

Demographic trends will shape the future, but they do not render particular outcomes inevitable. The evolution of the economy will depend on the way policymakers respond to the new situation. But those policy reactions will themselves be shaped by the priorities of older people to a greater extent than has previously been the case; they will be a bigger share of the population and in democracies they tend to vote more than younger people do.”

Copyright of ‘The Economist’ acknowledged