People are becoming healthier around the world
People today are healthier as they age, unlike their ancestors, Daly writes. A 70-year-old in 2022 had the same cognitive ability as a 53-year-old in 2000, according to a recent International Monetary Fund study of a large sample of individuals from both developed and emerging economies. The physical robustness of that 70-year-old corresponded to someone who was 56 in 2000.

“The fact that we are not only living longer but also slowing the process of aging throughout our lives raises an important economic point,” Daly writes. If increases in life expectancy extend the amount of time spent in the traditional idea of frail “old age,” more goods and services tailored for seniors will be needed. But if a more accurate picture is that the onset of “old age” happens later and later in life, an increased demand for products and services catering to an older population is less certain. “In a very tangible sense, 70 is the new 53,” he adds.

How does an aging population affect the economy?
A primary concern with an aging population is how it affects the so-called working-age ratio, the portion of the population in the 15-to-64 age range. This declines as more people reach retirement age, raising the fear that GDP per person will dwindle. In developed economies, the working-age ratio reached a plateau of around 67% from 1985 to the early 2000s but has since dropped to 63% and is projected to fall to 57% by 2075.

The key question, though, is whether employment falls on a one-for-one basis with changes in the working-age ratio, Daly says. Assuming this to be true “appears unduly pessimistic,” he writes. Age-specific employment rates are constantly changing and merely looking at the portion of the population in that 15-to-64 age range doesn’t tell the whole story.