An Age Old Topic

My Australian Financial Review opinion piece today is on ageing (remembering, as usual, that authors don't choose their headlines).

Coping with the grey masses, Australian Financial Review, 15 February 2011

How long do you expect to live? If you immediately thought about the official life expectancy figures (79 for men, 84 for women), you’re probably underestimating. Not only have you made it past the two risky periods of infancy and (I’m guessing) young adulthood. You also stand to benefit from medical advances in the future.

If there’s one thing you can expect about life expectancy, it’s that it will continue to rise. In the first half of the twentieth century, lifespans rose mainly due to improvements in the lives of the young. But since World War II, rising life expectancy has been driven mostly by improvements in the lives of older Australians.

If you plot the increase in Australian life expectancy over the past century, it is almost perfectly linear, right up to the present day. Even since 1990, life expectancy at birth has risen by 3 years for men, and 2 years for women. It’s possible that risk factors such as obesity will knock us off track, but if not, then current trends predict that life expectancy by 2050 will be 85 for men and 88 for women.

In Long for This World: The Strange Science of Immortality, Jonathan Weiner asks whether these trends will abate or accelerate. The pessimistic view is that gerontology is unlikely to ever solve some of the fundamental problems that cause ageing: cross-links that weaken our skin and damage our arteries, mutations that occur in our mitochondria, and ‘junk’ that builds up between nerve cells in the brain. An alternative view – proposed by advocates such as the eccentric Aubrey de Grey – is that these are solvable problems, and that death is just another preventable disease. (In the meantime, there’s reasonable evidence suggesting that extreme calorie restriction will give you a few extra years.)

But you don’t have to believe in immortality to recognise that population ageing is likely to have a significant impact on Australian society. In the labour market, we are likely to see a growing gap between ‘knowledge’ workers whose productivity steadily increases over time – and manual workers whose output depends on stamina and agility. Public debate tends to focus on the gap between the earnings of these two groups at a point in time, but it may be just as important to consider the disparity in career lengths. One of the reasons that the Gillard Government has been so keen to invest in trades training is to ensure that today’s tradespeople are able to enjoy careers that are both long and productive.

In the political arena, rising lifespans could have an impact on several debates. Because victims are typically older than criminals, an ageing society may have less sympathy for offenders. Because those who pay for education are generally older than those who receive it, demands for pay-as-you-go education schemes might grow over time. And because migrants tend to be relatively young, an ongoing skilled migration program will play a valuable role in replenishing the Australian labour market.

In the health sphere, expenditures are strongly skewed towards older Australians. So with health spending projected to take an increasing share of our incomes over coming years, it is critical to get proper incentives in place. (Alas, reportage of this weekend’s COAG health deal focused too much on power-plays and not enough on fundamental reforms such as the shift to activity-based funding of hospitals.)

Lastly, work on the economics of information is increasingly recognising the importance of presenting statistics and choices in the most straightforward manner possible. Underlying the federal government’s new MySchool, MyChild and MyHospitals websites is a desire to present Australians with the information they need, but without overwhelming detail. Transparency works best when information is also presented as simply as possible.

This is particularly challenging in the case of superannuation, given that we know financial literacy tends to peak when people are in their early-50s. One of the aims of the MySuper reforms is to ensure that you don’t need a PhD in finance (or the money to hire one) in order to maximise your superannuation returns.

In 1971, there were only about 200 centenarians in Australia. Now, there are nearly 4000. Though I still get a thrill from signing congratulatory letters to people celebrating their 100th birthday, it is becoming an increasingly common milestone. Longevity is a hallmark of success for our public health system, and represents a boost to wellbeing perhaps as important as economic growth. But we shouldn’t ignore the challenges – and opportunities – for policymaking in the future.

Andrew Leigh is the federal member for Fraser.

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