Aging is often mentioned as one of the most important challenges faced by societies in the industrialized world. On the one hand, an aging workforce is seen as a burden for economic growth and the sustainability of public finances. Estimates of the effect of population aging on economic growth for the U.S. by researchers at Harvard Medical School and the RAND corporation suggest that a 10 percent increase in the share of population aged 60 or more decreases the growth rate of GDP per capita by approximately 5.5 percent. On the other hand, aging societies are often blamed for political and social phenomena such as the rise of populism and the appearance of seemingly unsurmountable obstacles to further European integration.

To the extent that changes in prospective indicators of aging integrate the joint dynamics of health and age structure, they contain more valuable information about current and future macroeconomic developments than standard aging measures based exclusively on chronological age. In particular, prospective aging measures have been found to be better predictors of GDP per capita changes than their counterparts which use chronological age.

There are obvious advantages of this new approach to the measurement of aging at the aggregate level. Obtaining a reliable picture of demographic change in modern societies, which allows for comparability across time and between countries, requires the incorporation of prospective aging variables into the portfolio of standard measurements that inform evidence-based policymaking. Looked at this way, the world’s economic future is not quite as grey as conventional aging statistics might have us believe.

Read the full article about measuring the aging population by Jesús Crespo Cuaresma at Brookings.