The longevity dividend

In an article in the International Monetary Fund's Finance & Development Magazine, London Business School's Professor Andrew Scott and Sir Peter Piot argue that ageing populations should be embraced and not feared.

The story of demographic doom has become familiar: Declining birth rates will cause populations to shrink, while longer lifespans will increase the costs of pensions and eldercare. Relatively fewer workers will have to pay for it all.

This story is partly true: One in ten people worldwide are now over 65, and that proportion is projected to double over the next 50 years. Population decline has already begun in places such as Japan and China. Those countries are also experiencing a sharp increase in median age, as is Europe.

But the pessimism around an aging population is too one-sided. In fact, the combination of older people becoming more numerous and more likely to work makes them essential to economic dynamism.

In Europe, 90 percent of the increase in workers in the past decade—17 million more people in employment—came from a jump in workers over 50, according to the Organisation for Economic Co-operation and Development. In Japan, the proportion is even higher. In both places, older workers are already the main driver of GDP growth.

This is just one component of the “longevity dividend” societies can reap if we rethink our approach to ageing (Scott 2024). It starts with reframing the policy debate in two fundamental ways.

The first is to stop seeing an aging society only as a problem. This is a strikingly negative way of framing one of the greatest achievements of the 20th century: Most of humanity is living longer, healthier lives. That’s an opportunity.

The second is to drop the unworkable focus on changing individual behaviour in order to preserve current systems. Instead, focus on helping each person adapt to greater life expectancy—give them the support needed to live their best longer life.

This perspective points us to a new approach to aging based on redesigning health systems and investing more in our later-life human capital to seize the opportunities of an older, more experienced population.

To read the full article, click here