The Routledge Handbook of the Economics of Ageing

Cover
Half Title
Title Page
Copyright Page
Table of Contents
Figures
Tables
Contributors
1 Introduction to the Handbook
1.1 Why This Handbook?
1.2 A Brief Overview
1.2.1 Health
1.2.2 Pensions and Social Security
1.2.3 Income and Economic Growth
1.2.4 Work and Employment
1.2.5 Data and Measurement
1.2.6 Ageing and Personality
1.2.7 Regional Developments
1.3 Acknowledgments
Part I: Health
2 Modeling the Impact of Population Ageing on Future Fiscal Obligations
2.1 Introduction
2.2 Accounting Identity/Macroeconomic Approach
2.2.1 Description
2.3 Microsimulation/Markov Transition Approach
2.3.1 Description
2.3.2 Evaluation
2.4 Overlapping Generations/Microeconomic Approach
2.4.1 Description
2.4.2 Evaluation
2.5 Selected Review of Papers and Results
2.6 Suggestions for Future Work
3 Medical Innovations and Ageing: A Health Economics Perspective
3.1 Introduction
3.2 Trends in Health Expenditure, Morbidity, and Life Expectancy
3.3 Health Effects and Cost-Effectiveness of Medical Innovations
3.4 R&D Costs and Patent Values
3.5 Life-Cycle Considerations and the Value of Life
3.5.1 Lifetime Utility, Budget Constraint, and Optimization
3.5.2 Value of a Statistical Life
3.6 Morbidity, Healthcare Demand, and Medical R&D
3.6.1 Health Deficit Approach
3.6.2 Health Capital Approach
3.6.3 Non-Path-Dependent Mortality
3.6.4 Market Size Effects: Empirical Evidence
3.7 Effect of Health Innovations on Health Inequality
3.8 Avenues for Future Research
3.9 Conclusion
4 Medical Progress, Ageing, and Sustainability of Healthcare Finance
4.1 Introduction
4.2 Ageing and Medical Progress as Drivers of Health Expenditure Growth
4.2.1 Ageing: A Mixed Bag
4.2.2 Medical Progress, Income Growth, and Welfare State Institutions: Will the Culprit behind Spending Growth Please Stand Up?
4.3 Healthcare and Medical Progress as Drivers of Longevity
4.4 What Is It Worth? Value of Medical Progress
4.5 Endogenous Medical Progress: Empirical Evidence
4.6 Putting Things Together: Integrated Macroeconomic Modeling of Healthcare
4.6.1 Ageing in Macroeconomic Models with a Healthcare Sector
4.6.2 Medical Progress in Macroeconomic Models
4.6.3 Macroeconomic Models with Endogenous Medical Progress
4.7 Conclusions
4.7.1 The Ageing–Medical Progress–Healthcare Spending Nexus
4.7.2 Role of Economic Development
4.7.3 Role of Institutions
4.7.4 Type and Implementation of Medical Innovation
4.7.5 Distributional Concerns
4.7.6 Future Development
5 Technologies to Mitigate Cognitive Ageing
5.1 Introduction
5.2 Age-Associated Changes in Cognition
5.3 The Role of Technology in Mitigation
5.3.1 Rehabilitation
5.3.2 Augmentation
5.3.3 Substitution
5.4 Promising Technologies and Domains for Intervention
5.4.1 Prevention: Boosting Cognitive Health to Support ADLs and IADLs
5.4.2 Rehabilitation and Augmentation for Work
5.4.3 Augmentation and EADL Support
5.5 Conclusions
6 Gender, Ageing, and Health
6.1 Introduction
6.2 Gender Differences in Health among Older Adults
6.2.1 Life Spans
6.2.2 Physical Health
6.2.3 Mental Health
6.2.4 Cognitive Health
6.2.5 Subjective Well-Being
6.2.6 Health Impact of Birth Control
6.3 Explanations for Gender Health Gaps among Older Adults
6.3.1 Epidemiological Explanations
6.3.2 Biological Factors
6.3.3 Social Explanations
6.3.4 Contextual Factors
6.3.5 Methodological Explanations
6.4 Conclusion
7 Economics of Disease Prevention in the Elderly
7.1 Introduction and Summary
7.2 The Economic Challenges of Ageing Populations and the Role of Disease Prevention in Addressing Those Challenges
7.3 Burden of Disease in the Elderly
7.4 Scope Setting
7.5 The Intrinsic and Instrumental Value of Elderly Health
7.6 Rationale for the Government’s Role in Optimal Investment in Elderly Health Promotion
7.7 Evidence on Value for Money of Health Promotion and Disease Prevention Policies
7.8 Does Government Invest Enough in Elderly Disease Prevention?
7.9 R&D
7.10 Conclusion
8 The Economics of Long-Term Care
8.1 Introduction
8.2 The Market for Long-Term Care
8.3 The Contrast between Health Economics and the Economics of Long-Term Care
8.4 Key Issues for the Economics of Long-Term Care
8.5 Systematic Search for Articles Relating to the Economics of Long-Term Care
8.6 Issues Identified by Systematic Search
8.6.1 Unpaid Care
8.6.2 Demand/Insurance
8.6.3 Expenditure
8.6.4 Labor Market
8.7 Conclusion and Discussion
9 In Good and Bad Times—Associations between Spousal Health and Assortative Matching on Early-Life Factors in Europe
9.1 Introduction
9.2 Literature
9.3 Data
9.4 Associations in Spousal Adult Health and Its Determinants across Regions
9.5 Assortative Matching on Childhood Background and Adult Health
9.5.1 The Matching Model
9.5.2 Results: Matching Attributes and Health Outcomes
9.6 Conclusion
10 Mental Health and Illness in Ageing
10.1 Introduction
10.2 Common Characteristics of Mental Illness Relevant to Ageing
10.2.1 Compounded Consequences of Mental Illness for Social and Financial Well-Being due to Early Onset, Chronic Persistence, and Episodic Recurrence
10.2.2 Responsiveness to Economic, Social, and Personal Circumstances
10.3 Epidemiology of Mental Illnesses in a Life Course Context
10.3.1 Life Satisfaction
10.3.2 Suicide
10.3.3 Mortality and Morbidity
10.4 Policy Challenges Posed by Mental Illness in the Context of Ageing
10.4.1 Financial Security, Savings, and Investments
10.4.2 Social Capital, Social Networks, and Caregiver Burden
10.4.3 Implications for Health Systems
10.5 Concluding Observations
Part II: Pensions and Social Security
11 Social Security Reforms in Heterogeneous Ageing Populations
11.1 Introduction
11.2 Redistribution in Pension Plans: The Internal Rate of Return
11.3 Mortality Gradient by SES and the Impact on the IRR
11.4 Correction of Pension Plans for the Mortality Gradient by SES
11.4.1 Contributions
11.4.2 Benefits
11.5 Directions of Future Research
11.5.1 Estimation of the Mortality Gradient by SES
11.5.2 Empirical Evidence on the Variation of the IRR across SES Groups
11.5.3 Impact of Pension Reforms on Inequality (Behavioral Reactions)
11.5.4 Transition Costs
11.5.5 Multi-Pillar Approach
11.5.6 Dealing with the Source of the Inequality Problem
11.6 Conclusion
11.7 Appendix
11.7.1 Determinants of the IRR
11.7.2 Independence of the IRR to Different Income Levels
12 Economic Preparation for Retirement
12.1 Introduction
12.2 The Income Replacement Rate
12.2.1 Measurement of Replacement Rates
12.2.2 Shortcomings of the Income Replacement Rate
12.2.3 Financing of Consumption Out of Savings
12.2.4 Differential Mortality
12.2.5 The Role of Children
12.2.6 Life-Cycle Consumption Path Is Not Flat, Varies by Observables
12.3 Preparation for Retirement in the Context of a Structural Life-Cycle Model
12.4 Consumption-Based Measure of Economic Preparation for Retirement
12.5 Comparison with Income Replacement Rates
12.6 Summary and Conclusions
12.7 Future Research
13 Pension Policy in Emerging Asian Economies with Population Ageing: What Do We Know, Where Should We Go?
13.1 Introduction
13.2 Ageing and Informality
13.2.1 Demographic Change and Population Ageing
13.2.2 Informality and the Elderly Population
13.3 Pension Policy
13.3.1 Multi-Pillar Pension Taxonomy
13.3.2 Pension Policy in Emerging EA and SEA Economies
13.4 Policy Directions—Expanding Social Pensions
13.4.1 Policy Objectives and Economic Analysis
13.4.2 Features of Social Pensions
13.4.3 Fiscal Costs of Targeted Social Pensions—An Example
13.5 Concluding Comments
14 Trends in Pension Reforms in OECD Countries
14.1 Introduction
14.2 Extent, Limit, and Impact of Pension Reforms Over the Last Decades
14.2.1 Greater Recognition of Challenges Ahead but Uneven Pension Policy Achievements
14.2.2 Pension Reforms and the Political Process
14.2.3 More Efforts Needed to Assess the Impact of Enacted Reforms on Old-Age Income Inequality
14.2.4 The Shrinking Pension Gender Gap
14.3 New Avenues for Pension Policies
14.3.1 Policy Options to Increase Effective Retirement Ages and Their Limitations
14.3.2 The Question of Greater Sustainability of Pension Systems through Flexible Retirement
14.3.3 Pension Issues Related to Self-Employment
14.3.4 Impact of COVID-19 on Pensions
14.3.5 Consideration of Inequality in Life Expectancy in the Design of Pension Policies
14.3.6 News in the Debate between PAYG and Funded Pensions
Part III: Income and Economic Growth
15 Economic Growth, Intergenerational Transfers, and Population Ageing
15.1 Introduction
15.2 The Recent Literature
15.3 The Age-Distributed Economy
15.4 Population Ageing, Economic Output, and Its Primary Distribution
15.5 Population Ageing and the Intergenerational Redistribution of Income
15.6 Insights from National Transfer Accounts
15.7 Summary Measures of Imbalances Created by Population Ageing
15.8 Estimated Impact of Population Ageing on Economic Flows Over the Next 50 Years
15.9 Summary Indices: General Support Ratio and Transfer Load
15.10 Other Aspects of Population Ageing in Relation to Economic Growth
15.11 Research Directions
16 Consumption, Saving, and Wealth Accumulation at Old Age: Comparing Evidence from Developed and Developing Countries
16.1 Introduction
16.2 Consumption, Saving, and Wealth in Developed and Developing Countries
16.3 Consumption, Saving, and Wealth at Older Ages
16.3.1 Developed Countries
16.3.2 Longevity Risk
16.3.3 Bequest Motives
16.3.4 Medical Expenditures
16.3.5 Developing Countries
16.4 Advanced Research on Consumption, Savings, and Wealth Accumulation Decisions at Old Ages: New Data from Developing Countries
16.5 Conclusion
17 Automation and Ageing
17.1 Introduction and Background
17.2 The Role of Automation in Compensating for Ageing: A Simple Theoretical Illustration and the Current State of Empirical Research
17.3 Potential Displacement of Workers by Robots
17.4 The Effects of Automation on Health
17.5 Important Future Research Questions
17.6 Conclusions
18 Working Life—Labor Supply, Ageing, and Longevity
18.1 Introduction
18.2 Cross-Country and Historical Trends
18.2.1 Fact 1. Labor Force Participation Shows an Inverted U-Shaped Relationship with Age
18.2.2 Fact 2. Labor Force Participation of Men and Women Show Broadly Similar Variations with Age
18.2.3 Fact 3. Since the 1990s Labor Force Participation Rates in High-Income Countries Have Been Rising, Reversing a Century-Long Period of Decline
18.2.4 Fact 4. Increased Employment in Older Age Groups Has Become an Important Source of Overall GDP Growth
18.2.5 Fact 5. While Employment at Older Ages Has Increased, It Is Highest and Increasing Fastest among Those with Higher Levels of Education
18.2.6 Fact 6. Older Workers Are More Likely to Be Engaged in Part-Time Work and Be Self-Employed
18.2.7 Fact 7. Older Age Groups Remain Active and Productive Outside of the Labor Market
18.3 The Age of Retirement
18.3.1 Optimal Retirement
18.3.2 The Link between Retirement and Longevity
18.4 Beyond Retirement
18.4.1 Health
18.4.2 Wages
18.4.3 Hiring and Labor Demand
18.4.4 Education
18.4.5 The Nature of Work
18.5 Toward a Theory of Ageing
18.5.1 Different Concepts of Ageing
18.5.2 The Role of Time in Ageing
18.5.3 Are Older Workers Different?
18.6 Conclusions
19 Education and Ageing: Human Capital Investments and Ageing
19.1 Introduction
19.2 Production of Human Capital through the Life Cycle
19.2.1 Lifetime Effects of General versus Vocational Initial Education
19.2.2 Learning by Doing
19.2.3 Learning from Peers in the Workplace
19.3 Skills Obsolescence
19.4 Lifelong Learning: Returns on Human Capital Investments of Older Workers
19.5 Training and Retirement of Older Workers
19.6 Research Agenda
Part IV: Work and Employment
20 The Employment of Older Workers
20.1 Introduction
20.2 Changes in the Labor Supply
20.2.1 Health and Mortality
20.2.2 Education and Qualifications
20.2.3 Women’s Labor Force Participation
20.3 Technological and Structural Developments
20.3.1 The Productivity of Older Workers
20.3.2 Sectorial Transformations
20.3.3 The Transformations of Working Conditions
20.4 Social Security and Public Policies
20.4.1 Retirement Systems
20.4.2 Health Insurance
20.4.3 Labor Market Regulations
21 Retirement and Health
21.1 Introduction
21.2 Setting the Stage—Cross-Country Comparison of Retirement-Related Statistics
21.3 How Retirement Affects Mental Health and Physical Health
21.3.1 Cross-Country Studies
21.3.2 Single-Country Studies
21.3.3 Overview Studies
21.4 Effects of Retirement on Mortality
21.5 Cross-Partner Effects of Retirement
21.6 What Have We Learned?
21.7 What Can We Do?
21.8 Where Do We Go from Here?
22 The Relevance of Cognition in the Context of Population Ageing
22.1 Background
22.2 Data
22.3 Education, Employment, and Earnings
22.4 Marriage, Cohabitation, and Fertility
22.5 Health and Mortality
22.6 Cohort Trends
22.7 Conclusion
23 Productivity in an Ageing World
23.1 Introduction
23.2 Methodological Challenges
23.2.1 Age-Productivity Profile of Individuals
23.2.2 Methodological Challenges at the Country Level
23.3 Age and Productivity at the Micro Level
23.4 Ageing and Productivity at the Country Level
23.5 Summary and Conclusions
24 Population Ageing and Gender Gaps: Labor Market, Family Relationships, and Public Policy
24.1 Introduction
24.2 The Relationship between Female Employment and Fertility
24.3 The Labor Market
24.3.1 The Labor Supply of Elderly Workers
24.3.2 The Labor Demand of Elderly Workers
24.3.3 The “Double Burden” of Age and Gender
24.3.4 Gender Gaps from the Labor Market to Pensions
24.4 Family Relationships
24.5 Public Policy
24.6 Conclusions
Part V: Data and Measurement
25 Measuring Ageing
25.1 Introduction
25.2 The Force of Mortality
25.3 The Gompertz-Makeham Formula
25.4 Human Life Span and the Strehler–Mildvan Correlation
25.5 Reliability Theory
25.6 The Frailty Index
25.7 Individual Ageing
25.8 Ageing of Populations
25.9 Discussion and Conclusion
26 The Health and Retirement Study
26.1 Introduction
26.2 Phase 1: HRS Origins
26.3 Phase 2: The Steady State
26.3.1 The Steady-State Sample Design
26.3.2 Ancillary Studies
26.3.3 Internet
26.3.4 Dementia
26.4 Phase 3: Expanding Scope in the Core Survey
26.5 Phase 4: New External Initiatives
27 National Transfer Accounts and the Economics of Ageing
27.1 The Generational Economy and NTA Foundations
27.2 NTA Illustrated
27.3 NTA around the World
27.4 Use of NTA to Understand the Economics of Ageing
27.4.1 Youth and Old-Age Deficits
27.4.2 The Demographic Dividend
27.4.3 A Longitudinal Perspective
27.5 Future Directions
27.6 Conclusion
28 Ageing and Dependency
28.1 Introduction
28.2 Economic Dependency
28.3 Noneconomic Dependency
28.4 Measures of Population Ageing without Dependency
28.5 Usefulness of the Old-Age Dependency Ratio Despite Its Problems
28.6 Conclusion
29 Patterns of Time Use among Older People
29.1 Introduction
29.2 Literature Review
29.3 Data Resources
29.4 Patterns of Time Use by Age
29.5 Patterns of Time Use among Older People by Sociodemographic Characteristics
29.6 Research Needs and Opportunities
Part VI: Ageing and Personality
30 Ageing and Economic Preferences
30.1 Introduction
30.2 Age and Economic Preferences
30.2.1 Measures of Preferences
30.2.2 Risk Attitudes
30.2.3 Patience
30.3 Identifying the Age Gradient
30.3.1 The Age-Period-Cohort Problem
30.3.2 Age and Longevity
30.4 Mechanisms Linking Preferences to Age
30.5 Outlook
31 Financial Literacy and Financial Behavior at Older Ages
31.1 Introduction
31.2 Retirement Planning, Debt, and Financial Fragility at Older Ages
31.3 Financial Literacy at Older Ages
31.4 Financial Literacy and Financial Behaviors in Later Life
31.5 Limitations and Extensions
31.6 Policy Implications and Next Steps
32 Age and the Value of Life
32.1 Introduction
32.2 Age and the Value per Statistical Life
32.3 The Social Welfare Function Approach
32.4 Age and the Social Value of Mortality Risk Reduction
32.5 Discussion and Conclusion
33 Happiness and Ageing in the United States
33.1 Introduction
33.2 The Existence of a U-Shape in Happiness and Life Satisfaction
33.3 Empirical Evidence
33.3.1 Behavioral Risk Factor Surveillance System 2005–2017 (n=2,405,840)
33.3.2 Gallup U.S. Daily Tracker Poll, 2008–2017 (n=2,436,798)
33.3.3 General Social Surveys, 1972–2018 (n=60,054)
33.4 The Differences between the Married and the Non-Married
33.5 The Elderly
33.6 Conclusion
34 Ageing and Foreign Policy Preferences
34.1 Introduction
34.2 Population Ageing and Increased Preferences for International Peace
34.3 Ageing and Decreased Preferences for Internationalism
34.3.1 Ageing and Reduced Capabilities
34.3.2 Ageing and the Empowerment of Nationalist Leaders
34.4 Conclusion
35 Behavioral Science and Noncommunicable Diseases in Low- and Middle-Income Countries
35.1 Introduction
35.2 Key Care Differences between NCDs and Infectious Diseases and Their Implications for Clinician and Patient Behavior
35.3 Behaviors of Health System Actors Needed for Delivery of High-Quality NCD Care
35.3.1 Knowledge
35.3.2 Patient Norms and Beliefs
35.3.3 Inertia, Attention, and Habit
35.3.4 Health System Barriers and Design Frictions
35.4 Patient Behaviors Important for NCD Management
35.4.1 Biased Beliefs and Mismatched Mental Models
35.4.2 Present Bias
35.4.3 Forgetting, Inattention, and Salience
35.5 How Might Interventions Improve Compliance with NCD Care?
35.5.1 Provider-Focused Interventions
35.5.2 Provider Interventions to Address Knowledge Gaps
35.5.3 Interventions to Address Clinical Inertia and Low Attentiveness
35.5.4 Provider Interventions to Address Incentives
35.5.5 Patient-Focused Interventions
35.5.6 Patient Interventions for Forgetting or Inattentiveness
35.5.7 Patient Interventions to Address Present Bias
35.5.8 Patient-Focused Interventions
35.6 Conclusions
36 The Implications of Population Ageing for Immigrant- and Gender-Related Attitudes
36.1 Introduction
36.2 Ageing and Attitudes toward Immigration
36.2.1 Individual Ageing
36.2.2 Population Ageing
36.2.3 Policy Implications
36.3 Ageing and Attitudes toward Women
36.3.1 Individual Ageing
36.3.2 Population Ageing
36.3.3 Policy Implications
36.4 Concluding Remarks
Part VII: Regional Developments
37 Global Ageing and Health
37.1 An Ageing World
37.2 Ageing Populations
37.2.1 Demographic Transition
37.2.2 Population Growth
37.2.3 Population Aged 65 or Over
37.3 Ageing Individuals
37.3.1 Life Expectancy
37.3.2 Healthy Life Expectancy
37.3.3 Morbidities and Mortality among the Elderly
37.4 Ageing and Other Megatrends
37.4.1 Chronic Conditions and Ageing
37.4.2 Universal Health Coverage and Ageing
37.4.3 Pandemics and Ageing
37.4.4 Climate Change and Ageing
37.4.5 Migration and Ageing
37.4.6 Family Structures and Ageing
37.4.7 Ageing in a Digital World
37.5 Opportunities and Challenges for an Ageing World
38 Social Protection and Population Ageing: A Comparative Analysis of India and Indonesia
38.1 Introduction
38.2 Demographic Dynamics in India and Indonesia
38.2.1 National Comparisons
38.2.2 Intra-Country Observations
38.3 Key Characteristics and Recent Initiatives
38.3.1 Overview
38.3.2 India: Recent Initiatives
38.3.3 Service Provision Component
38.3.4 Managerial Component
38.3.5 Co-Payment Component
38.3.6 Technological Component
38.3.7 Indonesia: Recent Initiatives
38.4 Sustainability and Fairness: Major Challenges
38.5 Research Agenda
38.5.1 Actuarial Projections
38.5.2 Financial and Investment Management Literacy
38.5.3 Risk Management in the Payout Phase
38.5.4 Modernization of Social Protection Organizations
38.5.5 The Political Economy of Social Protection Reforms
39 Ageing in China
39.1 Introduction
39.2 Demographic Characteristics of Population Ageing
39.3 Economics of Ageing
39.3.1 Social Security
39.3.2 Retirement
39.4 Health Status and Healthcare of the Ageing Population
39.4.1 Health Status
39.4.2 Health Behaviors
39.4.3 Health Insurance and Healthcare Utilization
39.5 Family Support
39.5.1 Financial Support
39.5.2 Long-Term Care
39.5.3 The Future Role of Family
39.6 Discussion and Conclusions
40 Ageing in Latin America
40.1 Introduction
40.2 Measuring Ageing in the Region
40.3 Population Ageing and Economic Consequences
40.4 Overview of Social Support Systems in Latin America
40.5 Demographic Changes, Intergenerational Transfers, and Inequality
40.6 Demographics, Gender, and Time Use in Latin America
40.7 Migration, Gender Differences, and Ageing
40.8 Conclusion and Policy Implications
41 Population Ageing and Migration
41.1 Introduction
41.2 Previous Literature
41.2.1 Self-Selection of International Migrants
41.2.2 Effects of Immigration in Destination Countries
41.2.3 Welfare Effects of Emigration in Origin Countries
41.2.4 Demographic Change and Global Migration
41.3 Theoretical Framework
41.4 Empirical Evidence
41.5 Research Agenda for the Future
Index