The Downside to Longer Life

Via Tyler Cowen, Timothy Taylor glosses an IMF account of the economic consequences of an unexpectedly rapid increase in life expectancy in the developed world. Needless to say, the result is total doom for both public sector retirement programs and private sector pension plans. Thus all right-thinking people must fervently hope that the reverse happens, and rapid growth in the prevalence of multi-antibiotic resistant bacteria leads to an actual decline in life expectancy as routine hospitalizations for the troubles of aging become increasingly deadly.

But of course that’s insane. Nobody should hope that the antibiotic resistant infections problem gets worse.

This is why I oftentimes find the reification of purely fiscal lenses on demographic issues frustrating. It’s usually much clearer to talk about the real world. If you imagine a person retiring with some stock of resources (personal savings, emotional claims on descendants, political claims on public services) at his disposal then that person’s per-year living standards are going to be in part a function of his life expectancy. The longer he lives, in other words, the more stretched those resources become. But it’s perverse to phrase the “lives a long time” scenario as the bleak one, unless we’re positing some additional facts about quality of life. The same basic issue with the demographic pyramid arises in private contexts and public ones. It even arises if you entirely leave money out of things. One problem we’re going to face in the future, is that grandparents tend to want phone calls and visits from their grandchildren. But thanks to declining birthrates, the ratio of grandchildren to grandparents is falling creating increasing demands on grandchildren’s time. This problem grows more severe if grandparental life expectancy grows and it’s much less amenable to technological amelioration than the much-hyped problems with Medicare.