Economic and Policy Implications of Improving Longevity

Abstract

With all the rhetoric surrounding the impending "entitlement crisis" produced by the "graying of America," there has been surprisingly little serious analysis of the social and economic implications of increased longevity and the doubling of the number of elderly people that will occur in this country over the next 30 years. This article identifies five critical areas in which the effect of demographic change will be significant. First, patterns of work life and labor-force participation will almost inevitably change. Second, government expenditures now financed largely by payroll and federal income taxes will increase, whereas those financed by state and local property taxes will fall, at least proportionately. Third, the post-World War II pattern of suburbanized, automobile-dependent communities will pose special challenges to serving an aging population, and new adaptations will need to be developed. Fourth, intrafamily caregiving patterns will necessarily change. Fifth, the level of disability and dependence of older people, for which the rate of change is inherently unpredictable, will have a major effect on all these and other phenomena. Whether one views the net effect of all these changes as a positive or a negative, it is necessary to begin thinking a lot harder and more systematically about all of them.

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