S9 Ep8: The economic consequences of living longer

Episode Summary

Executive Summary: The episode argues that longer lives require rethinking aging, work, education, and policy. Martin Ellison and Julian Ashwin contend that longevity is not just about having more old people, but about extending the period in which people can work, learn, and contribute. They advocate less age discrimination, more flexible careers, lifelong learning, and better health investment to unlock older workers’ potential.

Main Topics: Longevity changes the economics of life cycles (Priority: 5/5): The guests argue that longer lifespans mean resources must be spread over more years, changing saving, retirement, and work decisions. Rethinking what it means to be 'old' (Priority: 5/5): Age should be understood relative to remaining life expectancy and health, not just calendar age, since a 57-year-old may still have decades ahead. Work, retirement, and flexibility (Priority: 5/5): People increasingly choose to work longer, influenced by health, job satisfaction, and flexible labor-market conditions, not just statutory retirement ages. Savings, pensions, and care costs (Priority: 4/5): Longer lives increase retirement saving, but some people oversave because they fear old-age care costs that may be impossible to fully self-finance. Age discrimination and age-friendly labor markets (Priority: 5/5): The speakers criticize age-based discrimination and argue for more flexible career paths that allow both younger and older workers to advance or step back as needed. Lifelong learning and human capital (Priority: 4/5): Education should not end in early adulthood; universities and training systems should support mid- and late-career skill renewal. Health as an economic policy lever (Priority: 4/5): Improving health can extend productive working lives, but economists still need better measures of the right kind of health for each context.

Key Arguments: Longer life expectancy changes the core problem individuals face: how to spread resources across a longer period of life. The demographic story is not just about more old people and fewer young people; the meaning of 'old' changes when remaining life expectancy is longer. Raising retirement ages is only part of the adjustment; many people already choose to work longer for health, enjoyment, or financial reasons. Flexible jobs and non-linear careers can help older workers stay employed longer and can also benefit younger workers. Current society wastes talent by allowing age discrimination even though older people remain capable of contributing. Lifelong learning should become normal, with universities and training institutions supporting skill updates throughout adulthood. Investing in health can have major economic returns by improving both quality of life and work capacity. Care-cost fears can drive oversaving, but some catastrophic care needs cannot realistically be self-financed, making current saving behavior imperfect.

Data Points: Age of host mentioned: 57 years old - Martin uses the host’s age as an example of how chronological age can mislead. Host life expectancy: 84 years - Used to illustrate that a 57-year-old may still have 27 years left. Remaining years: 27 years to go - The host’s life expectancy minus current age. Time horizon example: almost three decades - Describes the remaining life expectancy of someone age 57. Suggested retirement policy trend: retirement ages have increased across a lot of the rich world - Descriptive trend discussed by the speakers, not a precise statistic. Literature reference year: 2023 - Referenced in relation to the Journal of the Economics of Aging and a prior Vox episode. Journal volume: Volume 24 - Journal of the Economics of Aging volume containing the cited introduction article.

Pivotal Quotes: "if your lifespan gets longer, you've got to spread whatever resources you have over a longer period" — Martin Ellison: Explaining the basic economic mechanism through which longevity affects saving and work decisions. "we have brought in all sorts of legislation that you can't discriminate on the basis of gender, on the basis of race, or religion. But yet, we still allow quite a lot of discrimination on the basis of age" — Martin Ellison: Arguing that age discrimination is inconsistent with other anti-discrimination norms. "I think we need to change the way we think of university and make it a very lifelong learning type of environment" — Martin Ellison: Making the case for education that continues throughout adulthood.

Implications: Governments, employers, and education systems should adapt to longer lives by reducing age bias, creating flexible careers, supporting lifelong learning, and investing in health. Doing so could raise productivity, reduce inequality, and unlock unused older-worker potential.