Economic growth allows us to choose longer lives – surely that’s a good thing?

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In developed countries today life expectancy at birth is about 80 years. That figure has almost doubled over the past century. Life expectancy at birth measures how long someone born today would survive if the patterns of mortality existing when they were born continued through their lifetime. But they will not.

These patterns improve, so that most people born in the past century have lived far beyond their life expectancy at birth. Children born today can expect to live well beyond 80 years, even if the claim by Peter Thiel and Aubrey de Grey that the first 1,000-year man is already alive is optimistic.

Life expectancy was much lower a century ago because many children died in infancy and many adults failed to achieve a normal lifespan because they were killed by now-curable infectious diseases. Deaths from these sources are now so low that even dramatic further improvements will not have much effect on average lifespan. The most important factor today is increases in life expectancy after conventional ages of retirement. This measure has recently been improving at one to two months a year.

Life-saving advances are the greatest benefit of technological change. And yet when pundits discuss the future, the excitement around driverless cars and nanotechnology gives way to long faces when the topic moves to human longevity. It may be nice to live longer, but what about the effect on the economy? The question is absurd. Economic growth is about giving people more choices, and no choice is more earnestly sought than the chance of a longer life. The hard economic evidence is the amount that people are willing to pay to extend their lives even for short periods.

The demographic “crisis” has several components. There is the cost of pensions. Someone born today, retiring at 60 and living to 100, would have equal spells of work and retirement. Society is moving towards the obvious resolution – a concept of flexible retirement in which people can choose their preferred trade-off between work and leisure.

Achieving these extended lifespans costs money. Not necessarily much, because healthy lifestyle is a more important contributor to longevity than medical treatment. But we all die, either from the remaining diseases we have not yet learnt to cure, or the accumulated effects of old age itself. So medical and care costs will inevitably be an increasing fraction of national income. But this is money the public really wants to spend. It resists attempts to control the grotesque costs of private US healthcare. “More for the National Health Service” is always the British electorate’s top spending priority.

Then there is the burden of an ageing population on a younger workforce. Here we are caught in a squeeze between the growing numbers of the elderly and a lower birth rate. In Europe today, the median age at which women have their first child is over 30. But we do not know whether these women, pursuing careers before starting a family, will ultimately have fewer children or just later children: completed family size is the key variable.

Prediction is hard, especially about the future. Gloomy prognostications, sometimes of population explosion, then of secular stagnation, have repeatedly been falsified. But one certainty is that all the issues of concern result from developments that give us more choices – the choice between higher material living standard and more leisure, the indulgence of spending more looking after ourselves, and the opportunity for women to have careers as well as, or along with, family lives.

What is not to like about these developments? Why should we care about lower gross domestic product per capita, or higher public spending as a share of national income if it is the consequence of things that make us better off?


This article was first published in the Financial Times on October 15th, 2014.


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