Life expectancy in the 21st century

A challenge for developed countries

The developed regions and countries of the world have experienced significant increases in life expectancy and population ageing since the second half of the 20th century and will continue to experience a so-called ‘greying’ of their populations in the first half of the 21st century. However, they are not necessarily prepared to fully cater for the challenges brought about by these trends.

things, excellent healthcare backed by high levels of medical technology and infrastructure, and consequently a highly satisfactory quality of life. As a result, citizens are enjoying on average longer and healthier lives, which is one of the elements that contributes to sustainable human development as envisaged by the United Nations when they crafted the Sustainable Development Goals as a global development framework as from 2015.

OVERVIEW

The increase in life expectancy has become a global phenomenon and is largely due to improved medical technology and an improvement in the quality of life. Life expectancy is a statistical measure of the average time we are expected to live, based on our year of birth, current age, and other demographic factors such as biological sex. It does not take into account the effect of any future decline in age-specific mortality rates.

The increase in life expectancy and the survival rate into old age, coupled with decreasing birth rates and lower death rates, has an impact on the population structure and has led to an increase in the proportion of the total population that is older than 65 years. In 1950, just 5% of the world’s population was over 65; in 2015 the share was 8%, and it is expected to rise to 16% by 2050. The increase in the proportion of the total population that is above 65 is higher in developed countries (with China being the exception in developing countries, as 39% of their population is expected to be above 65 by 2050). The share of over-65s in the OECD countries is set to increase from 16% in 2015 to 25% by 2050.

The phenomenon of people living longer than previously to such an extent that the population structure of a country changes towards a more pronounced older age structure is called ‘population ageing’, and sometimes, in a more popular expression, the ‘greying’ of the population – hence the notion of the ‘grey generation’.

Population ageing (which is brought about by increased life expectancy, decreasing birth rates and lower death rates) is one of the most distinctive demographic events of the 1950–2000 period and is expected to intensify in the 21st century. The number of older persons (aged 65 or older) is projected to almost triple in size, increasing from 608,2 million in 2015 to 1,6 billion by 2050.

According to a UN classification, a population is regarded as ‘old’ in demographic terms if more than 7% of the population is aged 65+, ‘mature or of intermediate age’ if between 4% and 7% are aged 65+, and ‘young’ if fewer than 4% are aged 65+. Using this classification, the global population can already be regarded as old.

An ageing population largely because of a higher life expectancy has far-reaching consequences for society in general. It increases the ‘old-age dependency ratio’ (the ratio of people aged 65 or over to those aged 15−64), which was 13 − meaning 13 individuals aged 65 and over for 100 persons of working age − in 2015 and is expected to be 38 by the end of the 21st century. This increase in the old-age dependency ratio could result in labour shortages and create fiscal strain because governments have to spend more on healthcare and pensions to support the older population instead of spending more on education and infrastructure that will increase economic growth. Spending on pensions and healthcare − which already makes up over 16% of GDP in the ‘rich’ world − is expected to increase to 25% by the end of this century if no steps are taken to curb it. But an increase in life expectancy is not only negative, as it is viewed as an essential factor that affects the economic decisions of the individual and extends the return on human capital investment.

An ageing population is a greater challenge for countries in more developed regions than in less developed regions. UN projections of 2015 expect 26,5% of the population in the developed regions to be above 65 years old in 2050, compared to only 14,4% in less developed regions. Also, countries in less developed regions have higher fertility rates and higher mortality rates due to poorer healthcare systems.

In this study we focused on developed regions but included China due to the extraordinary growth in the ageing population expected for this country. ‘Older’ or ‘elderly population’ refers to persons older than 65 years as per the definition used by the UN.

The study used the Multiple Perspective on Social Change Model that was developed by the Stellenbosch University’s Institute for Futures Research to discuss the impact of an increased life expectancy on society. This model was chosen because it allows the impact of increased life expectancy to be explained in the different spheres shown in figure 1, as well as the interrelationships between the different spheres.

The increase in life expectancy in the developed world holds two main scenarios, with this phenomenon increasing towards 2050: it could either result in a ‘grey dividend’ or ‘grey destruction’ for economic growth in these countries. The most important factor that will determine the realisation of either of the scenarios is the ability of the population over 65 to extend their economic participation beyond normal retirement age.

ECONOMIC PERSPECTIVE

From an economic perspective, the following trends in respect of the older population can be expected:

An increase in the old-age-dependency ratio is causing governments to increase their spending on pensions and healthcare in order to support the older population. This means that less money is available to invest in education for younger sections of the population, as well as the infrastructure that will increase economic growth. The steady rise in life expectancy is requiring most workers to save more than their parents did to sustain them in their retirement.

An ageing population creates the opportunity for governments to allow people to migrate to add to the labour supply, as there tends to be a labour supply shortage in these countries. This is improving the economic productivity of the countries that accept the immigrants, as they tend to only allow younger applicants that are in good health and highly skilled. The tax base of the country is thus increased, and the resources spent on healthcare decrease as the immigrants are younger and in good health.

Extended economic participation of the older population is enabled by their improved health characteristics and this has a positive impact on economic development, growth and labour productivity. It gives employers and governments the opportunity to realise the grey dividend, but they need to adapt to an ageing workforce and remove ageist recruitment practices.

Multigenerational teams are found to be more productive, with older employees slower in certain operational work but making up for that with fewer mistakes. With repetitive work, productivity does seem to fall with age, but in knowledge-based jobs, age seems to make no difference to performance. In jobs that require social skills, productivity actually increases with age, giving older knowledge workers an advantage in the world of artificial intelligence (AI) where social skills may be at a premium.

Older people increasingly turn to the gig economy and entrepreneurship, as it is better suited to the needs of older workers – they are content to work part time, are not looking for career progression, and are better able to deal with the precariousness of such jobs.

Above-65s make economic contributions by doing non-paid work such as looking after grandchildren and volunteering. This enables parents to go out to work, which saves huge sums on childcare. Voluntary work benefits not only the good causes older people work for but also their own physical and mental health.

Older people have large purchasing power. Over-saving by older people causes them to spend less, but this creates an opportunity for financial products to be developed that enable more spending and increase consumer demand. That, in turn, promotes economic development.

RESOURCE PERSPECTIVE

The healthcare status of the population, and therefore life expectancy, is influenced by the status of the environment. Improved life expectancy in the future will depend largely on how developed nations deal with the damage caused to the global biospheres, as well as global warming. The focus is on economic growth and energy consumption is regarded as the main driver of economic growth. However, the energy supply is still largely based on fossil fuels, which cause environmental degradation and air pollution with serious health consequences. This will negatively affect life expectancy in due course.

The gradation of the biosphere and global warming are the biggest threats to water and food security. The growing human population and the focus on economic growth are damaging global biospheres through increasingly removing resources out of the environment while only putting back large quantities of waste and poison, thus changing the composition of the soil, water and atmosphere. Climatic changes are disrupting agricultural production, increasing urbanisation, making large parts of the earth uninhabitable and creating a refugee migration as never seen before. These factors are the underlying

ncreased tension in the world order.

The sustainable use of resources has led to a broader definition of business. The purpose of business was broadened beyond the interests of shareholders to include environmental, social and governance (ESG) criteria in allocating financial investments. In other words, businesses should pursue a purpose as well as, or beyond, pure profit.

The implementation of ESG criteria is affecting the dividend payment of companies, thereby affecting pension funds and creating problems for the elderly who rely on them for income, as these funds are reliant on dividend income and target companies such as Shell in their pension portfolios. For example, Shell faces the conundrum of how to preserve their dividend-paying capacity while at the same time changing the make-up of the company to be less dependent on profits from fossil fuel activities.

SOCIAL PERSPECTIVE

There is a societal perspective that older employees are less able-bodied, inventive and productive than younger employees. These perceptions are stumbling blocks for the elderly to continue their economic participation, as employers are hesitant to accommodate this group and use ageist recruitment practices and corporate cultures to impede the employment of older workers.

The older population is healthier than any previous generation. Ageist perceptions fail to take into account the healthcare characteristics of the older population, which are much better than those of previous generations. Research found that multigenerational teams that include older workers have higher productivity levels than young teams, which will amplify the grey dividend. Ageist perceptions need to be addressed as they may cause discrimination against older people when they apply for work, as well as intergenerational conflict between the younger and older populations.

The older population is turning to the gig economy and entrepreneurship to extend their economic participation. In response to the discrimination and inflexibility of employers, many of the older population have turned to the so-called gig economy, which suits them better in many ways. They have also turned to becoming entrepreneurs.

Globalisation enables interconnectivity and the moving of people, which creates opportunities for economic participation. The growing ageing population in developed countries is creating a labour supply problem, and this creates an opportunity for people from less-developed countries to migrate to developed countries to take up jobs and boost the labour supply. The arrival of immigrants is often viewed as a threat to the social fabric of developed countries. However, these migrants are sending remittances to their countries of origin to invest in human capital, thus enabling people in these countries to get better-paying jobs and promote their life expectancy through improved health outcomes. Developed societies need to be more tolerant of migrants and to understand that immigration holds a win-win situation for them as well as for the immigrants and their countries of origin.

Care for older people is becoming more diversified, more formal and more expensive. Care of the elderly is outsourced to nursing and retirement homes away from the family and is associated with exorbitant costs. End-of-life care is seen as one of the greatest financial risks of ageing. Society needs to plan how to treat the growing older population and how to finance funding for their healthcare and end-of-life care. Children born today will routinely live to 100, and if adequate preparation is not made to accommodate the increased lifespan, economies will suffer and social tensions could erupt. It is important for the future of developed nations to keep on investing heavily in the improvement of social factors such as education and health − this will ensure that the increase in life expectancy is maintained and the healthcare characteristics of the older population are improved so that they can be economically active for longer and do not require additional healthcare that could have been avoided.

There has been an increase in the divorce rate and people are turning to social media and online dating sites to find companionship. There are also more widowed people, which contributes to the increase in social media participation and online dating.

The fact that older people will probably be spending much more time with their partners may intensify latent adaptation problems and lead to divorce and separation.

With more cash being available than with previous generations, older people have become a target market segment for goods and services.

TECHNOLOGY PERSPECTIVE

Improvements in healthcare have increased the life expectancy. Better healthcare technology is vital for maintaining and improving the health characteristics of the older population and future generations. This will enable the elderly to be economically active beyond 65.

A further increase in life expectancy is expected due to innovation in stem cell therapy, biotechnology, genomics, 3D printing, and the use of pig organs.

Technology enables us to forecast future disease profiles. It enables decision-makers to plan and create future scenarios to understand the impact that diseases will have on the future ageing population. The cause of death has shifted to non-communicable diseases, and therefore it is especially important to allocate resources towards finding technology-based healthcare solutions in order to address the disease profile.

Smart homes, wearable devices that use sensors in the home or on the wrist to collect vital information, digital home assistants and on-demand services enable the elderly to remain independent for longer. Increasingly, clever technology is helping the oldest group make the most of the final stage of their lives, enabling them to age at home and retain as much autonomy as possible. The integration of technologies in smart homes and wearable devices is also leading to technology costs coming down as well as improved functionality between technologies. Technology-on-demand services help the elderly to request transport, grocery deliveries, handymen, nurses and doctors on call by a simple swipe of their smartphones.

Technology enables the older population to enter the gig economy and to overcome the discrimination and inflexibility of traditional employers. Two job opportunities that are particularly utilised by the older population are on-demand taxi services and Airbnb. Also, the over-60s are the fastest-growing group of hosts on the home-sharing site and receive the highest ratings.

Innovative insurance solutions and financial products to address the older population’s over-saving (by some) and under-saving (by others) for and during retirement is driven by technological innovation. Suggestions have been put forward to enable auto-enrolment and auto-contribution escalation for public pension funds and to enable a more flexible use of pension pay-outs. These will need to be supported by technology.

Technology assists the older population with the social aspects of living longer. The use of social media such as Facebook is an example.

POLITICAL/INSTITUTIONAL PERSPECTIVE

The increased life expectancy towards 2050 requires planning for health, social services and pension funding. The change in the disease profile of the future, especially the growing role of non-communicable diseases, requires careful planning and resource allocation to reduce avoidable mortality in the future.

A lack of planning could lead to intergenerational conflict. One of the key policy decisions that policymakers need to plan around is pensions, which can create intergenerational conflict because with public pension schemes, the younger population is in effect paying for the older generation. This can be addressed by extending the economic participation of the older population to create extra growth by for instance, delaying retirement by 2–2,5 years per decade between 2010 and 2050. This move would be sufficient to offset the financial effects of ageing.

Greater economic participation by the elderly requires a law prohibiting discriminatory retention and recruitment practices against the older population. Governments should also incentivise employers and support the growth of the gig economy that provides employment for the older population. Financing for start-ups by the older population should be created and their businesses should be supported. Economically active older people should be encouraged to save, and policies should be instated that allow retirement funds to be used more flexibly. The fiscal pressure on government to spend more on pensions − particularly by funnelling money away from investments that could lead to great economic growth − could be alleviated by adopting a policy option of making the enrolment in pension schemes more or less mandatory, including auto-enrolment and auto-escalation to increase contributions over time.

Policymakers and institutions need to put in place policies that support economic growth and also decrease inequality, which has been found to lead to stagnation in life expectancy and societal health. This stagnation in societal health occurs because societies that tolerate high levels of income inequality tend to underinvest in a wide range of human, physical, health and social infrastructures that promote population health.

Financing technological development that may make life easier for the elderly population remains a need. Governments should play an active role in supporting the development of these technologies by way of seed capital or by providing tax incentives to insurance companies to fund these technologies in order to decrease the actual costs when the elderly need to be hospitalised and institutionally cared for.

CONCLUSION ON TRENDS IDENTIFIED

The conclusion can be made that the most important factors that will determine the impact of increased life expectancy in the 21st century are:

The ability of an ageing population to extend the duration of their participation in economic activities over their life expectancy, and

Improvements in healthcare technologies, especially for the aged

These two factors are relevant for building insightful scenarios, because the economic participation of the ageing population will decrease the pressure on government spending on health care and pension pay-outs due to the increased life expectancy, whereas improvements in technology will determine the ability and quality of the ageing population to participate in economic activity and thus decrease the cost of frail care and end of life. The positive correlation between the relationship between life expectancy and GDP per capita (or total GDP) supports the selection of these two factors.

The two factors enable us to create scenarios of increased life expectancy in developed countries by 2050. A fourfold typology of scenarios can be identified using the Game Board Method, which presents a matrix according to two axes representing the two factors distilled from the literature review with positive and negative end poles respectively. The four spaces created accordingly on the Game Board define the four grey scenarios, as depicted in figure 2 on the next page.

Each scenario can be described in terms of the respective relationships between the corresponding poles on the axes.

The ‘Grey Dividend’ scenario is built by the expectation that by 2050 the ageing population would be able to extend the duration of their participation in economic activities over their life expectancy and by the benefits that improvement in healthcare technology would bring about for older people and society at large.

Moving clockwise, the next scenario is ‘Grey Dissonance’, which is defined by the expectation that the ageing population would be unable to extend the duration of their participation in economic activities over their life expectancy and by the benefits that improvement in healthcare technology would bring about for older people and society at large. With both expectations turning to be negative, ‘Grey Disaster’ is the most realistic scenario. ‘Grey Degradation’ is to be expected due to a lack of technological support for the healthcare of older people although they would be able to participate in the economy, leading to a degradation of their status in society even with their extended economic participation.

Grey Dividend

A Grey Dividend is possible under the following conditions in 2050:

• Anti-ageism is recognised internationally as a social norm and is nationally legalised.
• Companies’ core values include the use of multi-generational and diverse work teams.
• It is accepted that the gig economy is contributing significantly to economic growth and that the older population has become a necessary component of this economy.
• People older than 65 engage in the economy by starting up new companies (including unicorns), contributing to capital reserves through increased savings and pension fund contributions, and adding to higher productivity in knowledge-based occupations.
• Governments are enabled to increase their spending on education, infrastructure and healthcare technology, which, among other factors, drives economic growth.
• The younger population has developed positive attitudes toward senior citizens.
• Sustainability has become a key environmental value and an array of new consumption and production practices have become socially and economically institutionalised.
• New technologies have been invented and put into practical use to make life more comfortable and also safer for the elderly to remain independent for longer.

 

Grey Dissonance

The dissonance between smart and supportive technology (particularly for the elderly) on the one hand and the reluctance to integrate older people into the productive economic sphere on the other caused this scenario to be a reality by 2050:

• The outstanding positive impact on the older population has been the high levels of technological advancement that contributed to their overall quality of life, as well as improved healthcare.
• On the negative side, ageism has arisen, causing broad-based discrimination against the older population.
• The older population has become dependent on state support for pensions and healthcare with a resultant lower spending by government on infrastructure and education. In turn, this is causing a long-term weakening of the overall state of society.
• Older people have become dependent on family support, which is causing the younger population to see older people as a liability.
• Intergenerational disagreements and conflict are increasing.
• Sustainable resource usage had been introduced by the older population and generally accepted by the next generations, which is an area of agreement between the generations.

 

Grey Disaster

Having been forewarned already for a few decades that a grey disaster is imminent, especially in the developed world, countries and international agencies have not prepared sufficiently for the situation:

• Population ageing has become a reality, as reflected in demographic indicators on age distributions, especially by the disproportionate percentage of elderly members.
• Economic stagnation has become a challenge due to labour shortages, pension fund liabilities outstripping assets, resources allocated to healthcare, and pensions placing fiscal constraints on governments. In turn, this is slowing down innovation.
• Negative attitudes have arisen resulting in ageism and discrimination against the aged. This is limiting their ability to extend the length of their participation in economic activities in order to add to their savings.
• On all fronts, older people have become (or are seen as) a liability and burden on society and their children.
• Climate change has added to the misery of the elderly (as well as the rest of the population) and food and water insecurity makes life difficult.
• Due to all these factors, health for the aged has become a challenge and communicable diseases have become the life-threatening conditions they used to be long ago.
• Technology has not develop as expected and is not providing the support that it should.
• Society has become to experience a low quality of life and there are deep inequalities between the classes and generations.

 

Grey Degradation

The promise of extended economic participation for the older population and the associated expected advantages did not fully materialise due to a lack of breakthroughs in technology, particularly in the areas of healthcare and preventive medicine:

• All the above positive characteristics of extended economic participation for older people are building blocks for this scenario and older participants are regarded as productive and entrepreneurial workers.
• However, a large part of the older population has not improved much over the last decade because of a lack of technological breakthroughs in healthcare, such as finding cures and developing preventive measures and censors for cardiovascular diseases. This could be due to insufficient financing of technological development because governments have to invest in frail care and end-of-life care.
• There was an unsustainable use of resources (especially in energy use for production activities) as a result of climate change and associated effects. Removing resources from the environment while adding back large quantities of waste and poison has changed the composition of the soil, the water and the atmosphere.
• Global warming and the degradation of the biospheres have resulted in anger being directed towards the older generation by the younger generation. This is leading to ageism and social unrest. As a political response, parties are seeking to balance economic growth with sustainability and to reverse global warming and biosphere degradation.

 

FINAL CONCLUSION

Increased life expectancy leads to population ageing on a national scale. To enable us to plan more effectively for the future, population ageing ought to be seen from a multiple-perspective framework which includes the unique aspects of the different societal spheres that will affect citizens’ lives in the next three decades. In this article, we have outlined four possible scenarios for a grey future by 2050.

Authors
The primary author, Gideon Botha (enquiries gbotha1234@gmail.com), holds a PhD in Business Management and is currently completing his MPhil in Futures Studies at the University of Stellenbosch Business School. He is also a senior financial manager at Nedbank Group. Cornie Groenewald holds a DPhil in Sociology. He is Emeritus Professor in the Department of Sociology and Social Anthropology at Stellenbosch University and a part-time lecturer in Demography at the Institute for Future Research, University of Stellenbosch Business School. The animations are by Duncan Stewart

 

This article is based on the primary author’s coursework submissions towards his master’s degree in Future Studies at the University of Stellenbosch. References are available on request.