Your golden years are about to get crowded
by Yasir Aheer, Varun Rao and Rahul Rao
Summary:
A greater number of us are reaching old age than at any time in history. Increasing life expectancies and dropping birth rates are translating to an aging population worldwide.
While conventional wisdom is that population aging is detrimental to economic growth, at least one recent study found no negative relationship between aging and economic growth in terms of GDP per capita.
Demand for healthcare is projected to rise over the coming decades along with the associated costs.
Technology will play a central role in tackling the challenges ahead. Solutions are already being developed to help the elderly live independently and prevent injuries along with proactive interventions where possible.
Andre-Francois Raffray must have thought he made an exceptional deal when, in 1965, he bought Jeanne Calment’s apartment in the sought-after location of Arles, northwest of Marseilles in the south of France. Jeanne, 90 years old at the time, sold her apartment in an arrangement where she could live in the apartment till she died, in addition to Raffray paying her the modest sum of $500 per month. However … you guessed it, Jeanne outlived Raffray who died in 1999 aged 77, having paid an estimated $184,000 for an apartment he never acquired. Jeanne lived to become the oldest person in documented history with a recorded age of 122 years and 164 days.
A greater number of us are reaching old age than at any time in history. Global life expectancy has been on the rise driven by improvements in medicine, personal hygiene and living conditions. This together with dropping birth rates is leading us towards an aging population as shown in Figure 1 and reflected in the following:
In 2018, for the first time in history, individuals aged 65 or over outnumbered children under five years of age.
The population aged 65 or over is growing faster than any other age group globally.
By 2050, one in six individuals is expected to be over 65 (16%), up from one in 11 (9%).
In the US, the population over 65 is expected to grow from 16% of the population in 2019 to 21% by 2035, by which point they will outnumber those under 18.
What does it mean for the economy?
Conventional wisdom is that an aging population is detrimental to economic growth as there are fewer productive people. This leads to an unfavourable dependency ratio, calculated as the “non-productive” portion of the society (young and the elderly) relative to the working-age population. Unsurprisingly the dependency ratio is projected to rise over the coming decades. Such changes in population structure could have unprecedented implications for our economy. Will there be enough productive people? How will we cover the medical and healthcare programs as the recipient group continues to grow?
However, some countries with rapidly aging populations - such as South Korea, Germany and Japan - seem to be doing well so far. A recent study by economists Daron Acemoglu and Pascual Restrepo found no negative relationship between population aging and economic growth in terms of GDP per capita. They concluded that one possible explanation could be automation: technology performing tasks previously undertaken by manual labour. They noted that countries undergoing rapid aging have embraced more automation. However, the researchers acknowledge that there is much still to be learned and we have an uncertain road ahead: “We’re not sufficiently prepared to know what happens when the society ages, and we don’t know how to navigate it”.
What does it mean for the healthcare system?
While healthcare demand can be driven by many factors, the elderly tend to be more frequent beneficiaries. An aging population translates to greater demand so healthcare capacity will need continued upgrading to keep pace over the coming decades. Healthcare costs will also come under severe pressure as cost per capita tends to be higher in the older age group (Figure 2). Some factors that contribute to higher healthcare costs per capita for seniors include the inability to live independently, preventable unintentional injuries requiring medical attention, poor mental health because of social isolation or feeling of loneliness and general ailments caused by aging. Proactive solutions are needed to address these challenges, improve seniors’ health and prevent costs ballooning out of control.
How can technology enhance health & well-being?
Technology will play a central role in tackling the challenges ahead. Solutions are already being developed to help elderly live independently and prevent injuries along with proactive interventions where possible. Take ElliQ, a robotic companion developed by an Israel based company Intuition Robotics. Its creators’ mission is to help the elderly live independently and stay socially connected with their loved ones. With an expressive robot sidekick, the creators aim for it to be more than just a voice activated personal assistant, but rather a companion in their daily lives.
Another example is the Australian start-up Billy which is on a mission to help seniors live independently by focusing on a healthy daily routine. With a series of in-home sensors, Billy automatically tracks everyday activities like waking up, meal times and medication. Family members or caregivers can be notified with changes in routine allowing for early intervention.
Falling is the second leading cause of unintentional injury deaths in the older age group worldwide. An estimated 646,000 fatal falls occur every year, and another 37.3 million falls are severe enough to need medical attention. Wearable technologies are being developed with sensors that measure gait and orientation to detect a fall. An alert can then be sent to caregivers or emergency services in an event that user is incapacitated from falling. A variety of wearable options are being designed, from pendants through to watches.
Caregiving also requires a significant overhaul to reduce the risk of elder abuse or neglect. Among those caring for individuals with dementia, the rate of abuse has been reported to be as high as 11.9%. In Australia, elder abuse is estimated to be between 2% and 10%, with neglect possibly occurring at even higher rates. A large number of abuse or neglect instances may go unreported for fear of consequences, particularly if the senior is dependent on the abuser. They can also go unreported as the victim might be ashamed or embarrassed, or feel responsible for the behaviour of their family member, as elder abuse often occurs within the family or across generations. Los Angeles based Embodied Labs puts caregivers in the elder’s shoes using Virtual Reality. Through VR based immersive experiences, caregivers can build greater understanding, empathy and compassion for the special needs of individuals under their care.
There is also a vibrant research ecosystem to slow, or even reverse the aging process. In February of 2019, a group of researchers from Harvard, MIT, along with other global institutions launched a nonprofit called the Academy for Health and Lifespan Research. Their vision is to accelerate research into longevity and make it accessible to all. There are already some promising methods to treat adverse effects from aging. The most exciting among them is gene editing techniques such as CRISPR. While it may be infeasible to reprogram the entire body, or enable people to live forever, the ability to repair body's worn out parts could allow us a higher quality of life as we age.
Final Thoughts
A looming crisis, sometimes referred to as the Grey or the Silver Tsunami, is on the horizon with a projected increase in healthcare demand, rising cost and smaller active labour force to support the economy. We simply cannot continue a business-as-usual mindset and expect to cope with the projected labour shortfall and fund the ballooning healthcare costs. We need solutions that can replace displaced labour from active employment along with methods that reduce the projected demand on the healthcare system. Proactive solutions that improve seniors' health, well-being and prevent accidents will go a long way to limit strain on the medical system and the broader economy.
It is refreshing to note a vibrant ecosystem actively working on solutions. Solving for these challenges is not just an option, but rather an imperative. Our future health, well-being and lives hang in the balance.
Co-Authors:
Disclaimer: This article is based on our personal opinion and does not reflect or represent any organisation that we might be associated with.