Macroeconomic Implications of Demographic Change
Myths, Scientific Evidence and Economic Policy in an Aging World
There are many myths about individual and population aging that are not backed and often squarely contradicted by evidence. Demystifying aging by juxtaposing the myths with sober scientific evidence on the challenges and chances of aging is, as we claim, therefore one of the most important tasks of the economics of aging. This task is important since population aging requires adaptation through economic policy reforms which are frequently obstructed by such myths. The aim of this project is therefore threefold: to collect scientific evidence from the economics of aging in order to demystify popular fallacies; to review where we stand in the more subtle mechanisms behind these fallacies and where more data and research is needed to fully understand the economics of aging; and to emphasize the link between theory, evidence, and political economy in the economics of aging. Demystifying aging is doable since there is a growing body of data at the macro and micro level, some specific to certain countries, but many also internationally comparable. The international dimension is especially valuable since learning about aging requires variation in aging and aging-related policies. We find ample evidence that health at older ages has improved to support increasing labor force supply at these ages. There is even some evidence – although not uncontroversial – that health is positively related to active aging beyond current retirement ages. The evidence does not support the myth of quickly falling productivity after youth. Finally, there is no evidence that older regions and countries have less of the intergenerational cohesion that is so important to make economic policy reforms feasible. This project has been successfully completed and resulted in two prominent publications, one in English and one in German, each in a new (or newly set-up) journal: the Journal of the Economics of Aging and the Perspektiven der Wirtschaftspolitik.