Can We Afford To Grow Older?

The United States Social Security fund is huge and in trouble. The United Kingdom hasexperimented with the voluntary contracting out of pensions to the private sector. Chile hasprivatized its public pension system. Australia has adopted a means-tested public pension system.Japan has the earliest retirement age of any advanced economy; it also has the highest rate of laborforce participation by elderly men. Can We Afford to Grow Older? provides a comprehensive,up-to-date survey of the implications of population aging in these and other OECD countries relativeto a range of specific interrelated issues -- Social Security schemes, employer pensions,educational attainment, wage growth and distribution, economic productivity, consumption, savings,retirement, and health care -- all within a realistic framework for modeling and discussing policy.International in scope, filled with rich institutional detail, and built on a solid technicalfoundation, this will be a standard reference on the economic consequences of aging.Richard Disneyadopts a "life-cycle" view of the world which recognizes that individuals often make plans with aforward-looking perspective across the stages of childhood, the peak of economic productivity, andretirement. He stresses the existence of overlapping generations and the reality of generationaltransactions (which include tax and transfer systems, bequests, and charity to the elderly). And heassumes intertemporal optimization as a useful unifying basis for analyzing social security, privatepension schemes, lifetime labor-supply decisions, consumption, and saving.Among the surprisingconclusions that emerge is that there is no "crisis of aging" -- no adverse effect of aging onproductivity. And although there are serious crises in pay-as-you-go social insurance programs andin health care, these have little to do with aging. Moreover, the shift in private provision plansaway from traditional defined- benefit plans will continue, along with an interest in privatizedpensions instead of social security.