Aging Population and Economic Growth: An Uneasy Relationship

The silver tsunami is coming. Goldstein (as cited in Kye & Arenas, 2014) estimated that the median age of the world population will rise by 11.4 years from 2000 to 2050. This phenomena can be attributed to the increase in lifespan and the decrease in early mortality (Kye & Arenas, 2014). This essay contends that aging population would likely be a crisis to developing countries, as they could not reap the benefits like developed countries do. It will first explain why the environmental benefit might not happen in reality, then move on to examine the social and economic challenges posed, followed by explaining why developing could not reap the benefits that could be utilized by developed countries.

To begin with, some theoretical benefits of the aging population such as less CO2 emission might not materialize in reality. Kluge, Zag, Loi and Vogt (2014) reason that since CO2 emission per person tend to increase when one becomes adult, and then decrease as one retires, the higher proportion of elderly might translate to less CO2 emissions if everything else remains constant. While their proposition works in theory, their reasoning can hardly be applied in real life as it is almost impossible to achieve the condition of “everything remaining constant”. If global population continues to increase, the decreasing CO2 emission by aging population would be offset by the increase in total emission caused by increase in total population. Hence it is unclear whether this theoretical benefit will come about.

While the potential environment benefits seem unclear, the social and economic challenges posed are more evident.

One major social issue is the prolonged suffering from illness by the elderly. Sander, Jesper and Kras (2015) observe that elderly have to endure longer years of illness, disability, and deteriorating mental ability due to dementia and Alzheimer’s disease. In addition, disease and disability impede the process of establishing goals, and difficulty in establishing suitable goals will then deprives some elderly of the potential benefit of goal-setting (Sander, Jesper, & Kras, 2015). One might argue that the health status plays no role when it comes to assessing subjective quality of life. However, it still holds true that the most important factor in having a good life is having autonomy in conducting everyday activities: when such autonomy is lost, the elderly start to question their worth and feel useless (Sander, Jesper, & Kras, 2015).

Moreover, the decline in standard of life of the elderly is worsened by prolonged social isolation, which often happens after the elderly lose contact with their colleagues after retirement. Social isolation is not something to be taken lightly as it correlates with considerable health risks (Sander, Jesper, & Kras, 2015). It is more prevalent in communities where nuclear family become more common, and where traditional family offers less support to its members across generations than before (Kye & Arenas, 2014;Sander, Jesper, & Kras, 2015). Murakami and Atterton (2015) suggest that this challenge could be turned into an opportunity for the younger generation to learn from the elderly by encouraging communication between them.They suggest that younger people could learn life lessons and being mentored on business by the elderly. While their findings seems feasible in rural area in Japan, it is doubtful whether it will apply to developing countries such as China, where illiteracy is prevalent among elderly (Yuangui et al.,2003). Given the rapid transformation developing countries experience, it is questionable that the young people are willing to seek advice or mentorship from an illiterate elderly.

Furthermore, an aging population would harm the economy in 2 ways: first, increased government spending diverted to provide elderly care make it harder to accumulate capital (Global-is-Asian,2017); and second, the growing dependency ratio may reduce net output (Kye & Arenas, 2014). It is argued that growing population of older people would increase demand for elderly care goods and services, which will generate jobs for young people (Murakami & Atterton, 2015). This is only true when the elderly can afford those goods and services; if the majority cannot afford, the economic demand would not increase much. For example, the elderly in rural china experience high incidence of poverty and many cannot even afford basic services such as housing if not for the government’s pension scheme (Zhang, Luo, & Robinson, 2018). Thus developing countries where most elderly are poor and where the government does not give subsidy to elderly would not witness much of an increase in job opportunities solely as a result of an aging population.

In conclusion, aging population is probably a crisis for developing countries given the social and economic challenges it poses to them, and it is less of a challenge for developed countries as unlike the former, they have more resources to utilize the potential benefits that it brings. Nevertheless, technological innovation might offer us better strategies to tackle the problems in future.