October 22, 2025 • 26 mins
The world's demographic shift is often framed as a looming crisis, but new data suggests a more nuanced outlook. Hong Kong leads the longevity frontier with an average life expectancy of 86 years, having steadily increased by 0.25 years annually for over 150 years. Meanwhile, a landmark IMF study finds that today's 70-year-olds have the same cognitive ability as 53-year-olds in 2000, underscoring how healthier aging is reshaping workforce dynamics.
Kevin Daly, managing director and senior economist at Goldman Sachs, joins John and Katia to discuss why aging may not be economically detrimental, how healthier lives extend workforce participation, and why the “silver economy” narrative oversimplifies consumption trends.
Read Goldman Sachs’ related research: The Path to 2075 — The Positive Story of Global Aging (https://www.gspublishing.com/content/research/en/reports/2025/05/20/2d3fe290-10b1-44be-8d0e-77b8d303928f.html)
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Speaker 1 (00:01):
The aging of the world population is usually described as
a ticking time bomb, a crisis sending the world off
of social security, pension fund and healthcare spending. Cliff More
old people, fewer younger people working is a recipe for
higher government spending and sluggish economic growth, or so the
(00:22):
argument goes.
Speaker 2 (00:23):
But developed economies like the US and parts of Europe
have been through some of the biggest demographic shifts already,
and yet employment among people over the age of sixty
five is increasing, and research shows that people are generally
living healthier lives.
Speaker 1 (00:40):
You're listening to Asia Centric from Bloomberg Intelligence. I'm Kye
Tudumitreva on Hong Kong.
Speaker 2 (00:44):
I'm John Lee, also in Hong Kong.
Speaker 1 (00:46):
And this week we're looking at the world's demographic shift
and the graying of the economy from a bit of
a different perspective than you're probably used to, and we're
doing that with Kevin Daily, managing director and senior economist
at Goldman Sex.
Speaker 3 (01:00):
Welcome, Kevin, Well, thank you very much, as pleasure to
join you both.
Speaker 1 (01:05):
So, Kevin, the discussion about demographics usually involves focusing on
the negative, you know, high cost of pensions in healthcare,
fewer workers. There's this idea of you know, less creative,
less dynamic capital. Is that the right way to be
looking at it?
Speaker 3 (01:20):
First of all, let me say, the fact that we're
living longer, healthier lives is a testament to human ingenuity,
the healthcare improvements we've seen over the last two hundred years.
The fact that we're living longer is in itself a
positive thing that I think economists often miss when they
worry about the economic potential negative economic implications of that.
(01:45):
But you know, one of the arguments that we made
in our research actually, even focusing narrowly on the economic
implications of the process of aging, actually it's not clear
that it is as bad for the economy, or the
prospects ours are as bad for the economy as many
people suppose. The obvious way, the key way to offset
the effects of aging on working age ratios and dependency
(02:06):
ratios is that we need to, you know, as our
lives grow longer, we need to increase our effect of
working lives in proportion. Now, many of your listeners may say, well,
how is that a positive if we're going to have
to work longer, And Bob set this it's a positive
because it's something that is already happening. I mean, this
is a transition that has already well progressed. In fact,
(02:28):
if anything, we're extending our working lives faster than we're
increasing our overall lifespans. But it's also positive in the
sense that actually, when you look at the factors that
are driving this increase in effective working lives, actually they
themselves are quite positive developed. So two key things in particular,
One is increased female participation after childbirth, So women in
(02:52):
particular are extending their working lives because you know, through
increased participation across a lot of development economies. And then
the second factory is the reduced importance of manual work.
So you know, historically when you have a large share
of manual works, I'm talking about things like you know, manufacturing,
but also mining, construction work. These are sectors where people
(03:17):
typically retire relatively young, and as you've had a reduced
share of an employment in those sectors, you've also therefore had,
by implication, an increase in effective working lives, as you've
seen a progression more towards office space work. So not
only is increased longevity in and of itself a positive development,
(03:40):
but I think that you know, we're seeing effective working
lives increasing in response to that, and the factors that
are drive that increase are themselves positive.
Speaker 2 (03:48):
Kevin, I wanted to draw down on your statement that
we are working longer. Now. I wanted to ask is
this mostly a Western developed phenomenon because we're sitting in
Asia and totally we hear that. For example, in China
we see job descriptions where they say they only want
applicants that are under the age of thirty five. There's
(04:09):
also anecdotally in Korea we hear that there's an unwritten
rule that you have to be younger than the CEO.
Speaker 1 (04:15):
And.
Speaker 2 (04:17):
That becomes an issue because CEOs are generally getting younger
and younger.
Speaker 3 (04:21):
You know, there is an uneven pattern across economies. But actually,
I think the evidence suggests that data suggests that you
are seeing a broad based increase in effective working lives,
and I think one needs to see why that is happening.
One needs to reflect on actually what are we talking about.
How long is an effect of working life? So if
(04:42):
you think of the typical what economists would define as
the working age ratio, which runs from fifteen to sixty five,
so that implies a fifty year working life. Actually, in reality,
on average people do not work fifty years. Some people do,
but on average, actually effective working lives is much more
of the order of around thirty five years. Why is
(05:04):
it so much shorter. It's so much shorter because a
lot of women in particular have traditionally left the workforce
after giving childbirth, and so their working life, at least
their paid working life is significantly shorter than the average.
So a lot of the increase that we're seeing in
effective working lives is coming not from people extending their
(05:25):
working lives into the sixties and seventies, but rather just
by filling more of the gaps in the forties and fifties.
Now across Asia, there are some examples where actually I
think more progress can be made in this regard in
terms of increasing female participation in particular. But the idea
that there is the pattern of increasing effective working lives
(05:45):
is something that we are seeing not just in the
West but also in Asian economies.
Speaker 1 (05:50):
Yeah, it makes you wonder if we should revisit as
a society perhaps or you know, certainly government officials and
economist this idea of a prime age worker, for example,
which only really runs to the sixties. But if we're
working longer hours, or rather we're working for longer, then
perhaps I need to be resident. Perhaps, you know, we
(06:11):
should be looking at things like the retirement age. I mean,
what are your thoughts there?
Speaker 3 (06:16):
Yeah, So, I mean what is interesting in you know,
in this research, And one of the things that we
try to emphasize is that it's not just that we're
living longer, we're also living healthier lives. It was a
very interesting research by the IMF that was published recently
where they had a meta study. They had a very
large study of a million data points taken from people
(06:36):
over the age of fifty and they're testing how cognitive
abilities and physical abilities of older people have changed over time.
And one of the really interesting things from that study
is that they found that a seventy year old person
today has broadly speaking, the same cognitive abilities as somebody
who was fifty three in the year two thousand. A
(06:58):
seventy year old today has a same physical abilities as
somebody who was fifty six in the year two thousand. So,
you know, in a very real and tangible sense, seventy
is the new fifty three. So it's not just that
we are living longer, but our abilities and our functional
capabilities are extending throughout our working lives. So we have
(07:19):
the capability also to extend our effective working lives.
Speaker 2 (07:23):
Okay, I heard that forties are the new thirties, but
I never heard that seventies and you fifty three? But
why is that, Kevin?
Speaker 3 (07:32):
It's you know, it's interesting. So some people are surprised
by this. But if you you know, I'm in my
early fifties, so I've been around long enough to remember
back to the eighties, nineties sitcoms and TVs of that era,
and some of the stars from that era are now
sadly passing away more recently. And it's funny when you
(07:53):
look at the pictures of the people from those eras
in many case these actors and even sports stars were
in their thirties at that time, and you look at
the pictures of them at that time, you go, these
are people who would now pass for being forty or
fifty year old now. So even in terms of how
you look, actually, I think there's been a significant change
(08:14):
in the process of aging. You know, not only are
we living longer, we're living healthier. We even look younger
than we did twenty thirty forty years ago.
Speaker 1 (08:23):
Why is that, like, is it just in medical developments?
Is it less smoking? Maybe, you know, cosmetics it is
I mean, it's to some degree, it's all of those things.
Speaker 3 (08:36):
But I think it is a focus much more on
healthier living. It is medical advances obviously are critically important,
but also, you know, a much greater focus on healthier living.
I mean, there was a you know, culturally, I think
back in the eighties and nineties, I think there was
a sense that you know, once you made it into
your thirties, that's you know, you sports for instance, sports activity, cycling,
(09:00):
even walking was something that people did in their childhood.
It wasn't something you did while you're working. Smoking the
amounts of smoking, drinking that people did in that area.
So we're living a lot healthier now than we did
at that stage. But as I say, medical advances as
well are clearly important in that asia.
Speaker 2 (09:18):
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(09:40):
you like what you hear, don't forget to subscribe and share. Kevin,
A lot of investors have talked about this concept of
the silver economy, the industries and companies that cater towards
the elderly. For example, in Hong Kong, one third of
the population will be over the age of sixty five
in about twenty years. But what do you think do
you think this is going to change consumption habits in
(10:02):
particular for the silver economy.
Speaker 3 (10:05):
So actually, one thing I should say, as a slight
segue to your question, is that Hong Kong. You know
you're interviewing me from Hong Kong. Hong Kong at the
moment does hold the record for the Hong Kong represents
the longevity frontier. So life expectancy in Hong Kong is
eighty six at the moment.
Speaker 1 (10:22):
So what is.
Speaker 3 (10:23):
Interesting is that when demographers look at what they describe
as the longevity frontier, so this is the country or
region that has the highest life expectancy at the moment.
At the moment, the region with the highest life expectancy
is Hong Kong at eighty six years, But fifty years
ago it was Iceland at seventy five years, and one
(10:46):
hundred years ago it was Australia at sixty three years.
And what's interesting if you look in the longevity in
that frontier, it has been growing at a very stable
rate of a quarter of a year per year for
more than one hundred and fifty years, and repeatedly demographers
have expected projected that this improvement has to tail off,
(11:10):
there has to be some cap on life expectancy, but
repeatedly and consistently year and year out, its defied those
expectations and continue to grow at a quarter of a
year per year every year. Now, overall global life expectancy
has actually increased even faster than that because there has
(11:31):
been in the last fifty years some convergence to the frontier.
So the improvements in countries with relatively low life expectancy
has been even faster than in the frontier. But what
is interesting that that frontier, so the peak of longevity,
has continued to steadily increase over time.
Speaker 2 (11:50):
Didn't the US have a drop in life expectancy or
was that just an anomaly.
Speaker 3 (11:55):
It did, and it is in the sense that, yeah,
over the last ten years there has been a drop
in life expectancy. There are some other individual countries where
one has also seen that, so the UK be another example.
So this improvement is not that it's in every country
every place, all the time, but on average there is
(12:16):
a significant improvement, and certainly in the frontier there is
an improvement.
Speaker 1 (12:19):
I mean, it sounds like if you want to live
a longer life, you probably have to move to Asia.
That's the message that I'm coming.
Speaker 3 (12:25):
Over, Yeah, or live relatively healthy lives. Maybe it's an
issue of diet. Turning to your question, I think that
this portrayal that because people are living longer, there's going
to be a big shift in relative demand towards things
that quote unquote old people require. I think that is
(12:45):
wrong in quite a fundamental way. And the reason for
that is that, you know, all this research that I
quoted suggested that it's not just that we're living longer
in old age, we're actually extending each part of our lives.
So where we're younger for longer, we're middle aged for longer,
we're older also for longer. A lot of these studies
(13:05):
that look at the implications of a silver economy almost
treat everything up to the age of sixty five as fixed,
and it's just that we've got a much more extended
period from sixty five onwards. The research that we have done,
the research that the IMF have done and that others
have done, have suggested that all parts of our working
lives are longer, and so therefore one should be no
(13:25):
more investing in or focusing on things specific to older people.
Then one should be focusing on things specific to younger people,
because we're going to be younger for longer as well.
So you know, one key implication. For instance, if your
effect of working life in reality is going to be
longer now than it would have been twenty thirty, forty
years ago, then it makes sense to invest more in
(13:48):
your education as well, because to invest in the skills
that you will require for a longer working life. So yes,
let's invest in goods and services targeted for older people,
but let's invest in goods services targeted for younger, middle
aged people as well.
Speaker 1 (14:03):
So your point there being that it's not just that
we're going to have this wave of people in the
later stages of their life. Your point is that because
we're living longer lives, the buckets devoted to every important
kind of segment of our lives that's also extending. So
we could maybe see a day where middle age extends
all the way up to sixty five for example, our
(14:25):
you know, our shopping habits don't change. But what I'm
wondering though, is like, as a share of the total population,
it is a reality that as a share, those that
are sixty five plus will make up a bigger chunk.
So doesn't that group have different interests and ways of
spending money that investors could benefit from, Like I don't know,
(14:47):
we were talking about like cruise ship operators before this,
or like, you know, other services.
Speaker 2 (14:52):
Pharmaceuticals. General leads perceive that older people consume more pharmaceutical products.
Speaker 3 (14:58):
In terms of health services, we are across the world
increase in our consumption of healthcare, you know, both pharmaceuticals,
but also the amount of money we're having to spend
on health. But to some degree that that reflects our
demand for the increase in health. We're prepared to pay
more to live these healthier lives. In a sense, it's
a good return on our investment given how much longer
(15:21):
and healthier we are living but cashier. To come back
to your question, I think we are. I mean, let's
take myself. I'm fifty two. My kids Sometimes joke is
that you're only middle aged if you're expecting to live
until you're past one hundred. You know, but love that.
But maybe I will live past one hundred is my
(15:42):
first response to that. But b I think most people
in their fifties now would still consider themselves to be
of middle age. But that probably wouldn't have been true
twenty thirty years ago. And the things that I am
demanding today, the goods and services that I am demanded today.
You know, I cycle into work every day. You know
I probably wouldn't have been doing that twenty thirty years ago.
So yes, you know, what a typical let's say sixty
(16:05):
five year old requires or wants or demands today, the
type of holidays they require is very different from what
it would have been twenty thirty years ago.
Speaker 2 (16:14):
Kevin. A lot of governments around the world have focused
on increasing or trying to increase the fertility rate. There's
been talk of some countries trying to even considering like
a baby bonus or you know, lower attacks to people
have more kids. What's your view on that.
Speaker 3 (16:31):
You know, as an economist, it's hardwired into my DNA
to believe that financial incentives work. So I mean, I
believe that those incentives are effective at the margin to
some degree, but the evidence suggests across countries they tend
to have smaller than hoped for effects, and those effects
are often relatively temporary. What I think would be more
(16:52):
effective in Ameliar eighteen the impact of or reduce fertility
and the impact of that on ultimately economic performance, will
be focusing on things like improving childcare so that women
can continue to work after they've had children. And actually,
in cross country studies, in different research that we have done,
(17:13):
we found in economies where it is easier for women
to both combine having children with working, actually both tend
to be higher. And I'm thinking of economies like Japan
where both were tradition but also financial incentives. There was
you know, often it was more unusual for women to
(17:34):
continue to work after having kids, or you found in
those economies where women face a choice either of working
or of having children, actually both tend to be lower.
Female employment is lower and fertility is lower. So if
you really want to encourage or improve fertility but also
to increase female employment, you should do as the Scandinavians do,
(17:54):
which is to increase the availability of childcare and make
it easier for women to both combine work with having children.
Speaker 1 (18:02):
On that point, you wrote this paper in two thousand
and seven about how fixing or addressing gender inequality could
actually boost economic growth as well, so raising some of
the stats, raising USGDP by as much as nine percent,
Eurozone by thirteen percent, Japanese GDP by sixteen percent. And
by the way, for the listeners, a lot of the
(18:23):
data that we've been talking about today is in this
Goldmin Sachs report, the Path to twenty seventy five The
Positive Story of Global Aging, and that's co authored by
Kevin Daily. You know, twenty years past that now, two
decades past that, now, how would you say those economies,
which some of them we've just talked about in terms
of offering incentives and trying to address this, but how
(18:44):
would you say that they've done on this front kind
of looking at globally, how are countries doing on that
front of kind of trying to encourage women.
Speaker 3 (18:53):
So this research was part of Golden Sacks as broader
women ONMICS research, which was first started with Kathy Matsui,
a former analyst for US in the Japan Office, and
it was focused in particular because it historically has been
a particularly big issue for Japan and the fact that
within the research that I did back in two thousand
(19:14):
and seven found that the benefit of reducing employment inequality
would boost Japanese growth GDP rather by sixteen percent, so
much bigger than most developed economies on average, reflect to
the fact that they were so much further behind that
they had so much you know, more inequality and employment
to address in most advanced economies. I think progress has
(19:37):
been made. It's been you know, there has been more
growth has come from female employment in particular, so there
has been some convergence. I would think of economies which
have done particularly well in closing that gap actually would
highlight Spain, where there's been quite a radical transformation. But
then there has been some economies that more recently have
done slightly less well in that regard. You know, the US,
(19:57):
the progress has been mixed. I think there's still a
lot of progress still to be made. So in Japan
that gap has closed somewhat, but it certainly could close
a lot more.
Speaker 2 (20:07):
Kevin, I have your GDP forecasts across countries through to
twenty and fifty and through to two thousand and seventy five,
and it's very interesting you think that there's going to
be a big change in which countries have the largest GDP.
In particular, China is going to overtake the US, but
you also have India there. Can you explain like how
these impacts the growth forecasts going forward.
Speaker 3 (20:30):
The aging research that we have done is part of
our broader Path to twenty seventy five research, which includes
these longer term GDP projections that you've mentioned, And one
of the key insights from these broader projectors is that
there will be a huge and has been and will
continue to be a huge growth in the relative importance
(20:52):
of Asian economies. In particular China is a classic example.
Back in two thousand, China represent only twelve percent of
US GDP. It's now of the order of seventy five
to eighty percent of USDDP. So there's already been a
very significant convergence in the size of China's GDP. But
looking forward, some of the countries that we think will
(21:15):
show the fastest growth or biggest convergence over time, are
now going to be India. Also, i'd highlight Indonesia. It's
an economy which is growing in significant size, and given
the demographic size of these Asian economies, I think over time, yes,
they will account for a much largest share of global
GDP than they do today.
Speaker 1 (21:34):
Yeah, you guys see Indonesia in twenty fifty, so in
twenty five years as the world's fourth largest economy, and
then by twenty seventy five still maintaining that hold. So
by twenty seventy five we've got China, followed by India,
followed by US and Indonesia and Nigeria. So is that
a story of population growth then, I mean Indonesia does
(21:55):
tend to have a higher birth rate fertility rate than
others globally.
Speaker 3 (22:00):
It's also primarily a story of the size of the
relative populations today as well. And it's interesting is that
when you publish this research you never quite know there
will always be one or two countries in particular that
it really sort of hits home and people focus on
and quite which those countries people are most surprised by.
It's difficult to anticipate before publication, but Indonesia is something
(22:23):
that has really caught people's eye. I mean, bear in mind,
we publish those projections in twenty twenty two. Actually, Indonesia's
growth in the years since then, I know it's not
a particularly long period, but has been faster than we
had within our projection. So, you know, much as people
may be skeptical about how much they will grow in
that in the medium to long term, so far, they've
been growing quite a bit faster than we anticipated in
(22:46):
the research. Our convergence assumptions on GDP per capita are
actually pretty cautious, so it is possible that countries will
fall short of that convergence projection. But I think there's
also up side risk in many cases, as Indonesia in
the last couple of years has shown.
Speaker 1 (23:04):
And overall, I'm just curious, because we started this conversation
talking about the upside of demographic shifts. Why do you
think it is that usually when we talk about this issue,
it's often framed in the negative. You know, we talk
about the rising costs, we talk about the weight on
the pension system. You're an economist, please.
Speaker 3 (23:27):
Tell us, I mean I am an economist, But I
actually think at some level it's a more basic human
emotion that we often confuse the impact of ourselves getting older,
which you know, intrinsically is a scary thing, and what
it means for our own futures as we personally age,
(23:49):
with the process of societal aging, which is quite a
different thing. Even if it is worrying for us personally,
the fact that we are getting older over time, it
doesn't mean the process more broadly for society of a
gradually aging society is negative economically in the same way.
And I think at some base level we almost confuse
(24:12):
those two concepts, and so our perception of the implications
of aging are tainted by our own fears for our own.
Speaker 1 (24:20):
Futures, existential dread. Speaking of existential dread AI and jobs.
So we're living longer, we're also working longer. You know,
governments are hopefully going to be able to help with
job retraining everything. But then there's this threat of AI
looming in the threat of dislocation of jobs. How concerned
should we be about that? Does that present a risk
(24:42):
to this outlook where we're going to be working longer.
Speaker 3 (24:45):
Lives AI we think will will increase productivity significantly over time,
which sounds very positive when economists put it like that,
but what does that mean in practice? Saying increasing product
we mean that actually a sensely we would be able
to do the same work with fewer jobs. So it
(25:06):
will be disruptive for individual sectors. It will be disruptive
for the workers that are directly involved. But we've seen
two hundred plus years of consistent technological improvements going all
the way back to the luodites, and much as that
the new technology back then, the mechanical weavers, was very
(25:27):
bad for the lod heightes directly. I mean they it
did put them out of employment, so it's very rational
from their perspective to be worried about that it didn't
result in an increase in aggregate unemployment. And I tend
to be more on the optimistic side in the sense
I tend to believe that this new technology, important as
it is in keeping with previous new technologies, will be
(25:50):
disruptive for the sectors that are directly affected, but won't
result in an increase in overall unemployment.
Speaker 1 (25:57):
Great, thank you so much for joining us today.
Speaker 3 (26:01):
Thank you very much, Cartian, Thank you John.
Speaker 1 (26:03):
You've been listening to Asia Centric from Blueberg Intelligence and
Kati Dimitriva on Hong Kong.
Speaker 2 (26:08):
I'm John Lee, also in Hong Kong. You can find
all our episodes on Apple Podcasts, Spotify or whereview listen
and this podcast was also produced and edited by Clara Chen.
Thanks for listening.
The aging of the world population is usually described as
a ticking time bomb, a crisis sending the world off
of social security, pension fund and healthcare spending. Cliff More
old people, fewer younger people working is a recipe for
higher government spending and sluggish economic growth, or so the
(00:22):
argument goes.
Speaker 2 (00:23):
But developed economies like the US and parts of Europe
have been through some of the biggest demographic shifts already,
and yet employment among people over the age of sixty
five is increasing, and research shows that people are generally
living healthier lives.
Speaker 1 (00:40):
You're listening to Asia Centric from Bloomberg Intelligence. I'm Kye
Tudumitreva on Hong Kong.
Speaker 2 (00:44):
I'm John Lee, also in Hong Kong.
Speaker 1 (00:46):
And this week we're looking at the world's demographic shift
and the graying of the economy from a bit of
a different perspective than you're probably used to, and we're
doing that with Kevin Daily, managing director and senior economist
at Goldman Sex.
Speaker 3 (01:00):
Welcome, Kevin, Well, thank you very much, as pleasure to
join you both.
Speaker 1 (01:05):
So, Kevin, the discussion about demographics usually involves focusing on
the negative, you know, high cost of pensions in healthcare,
fewer workers. There's this idea of you know, less creative,
less dynamic capital. Is that the right way to be
looking at it?
Speaker 3 (01:20):
First of all, let me say, the fact that we're
living longer, healthier lives is a testament to human ingenuity,
the healthcare improvements we've seen over the last two hundred years.
The fact that we're living longer is in itself a
positive thing that I think economists often miss when they
worry about the economic potential negative economic implications of that.
(01:45):
But you know, one of the arguments that we made
in our research actually, even focusing narrowly on the economic
implications of the process of aging, actually it's not clear
that it is as bad for the economy, or the
prospects ours are as bad for the economy as many
people suppose. The obvious way, the key way to offset
the effects of aging on working age ratios and dependency
(02:06):
ratios is that we need to, you know, as our
lives grow longer, we need to increase our effect of
working lives in proportion. Now, many of your listeners may say, well,
how is that a positive if we're going to have
to work longer, And Bob set this it's a positive
because it's something that is already happening. I mean, this
is a transition that has already well progressed. In fact,
(02:28):
if anything, we're extending our working lives faster than we're
increasing our overall lifespans. But it's also positive in the
sense that actually, when you look at the factors that
are driving this increase in effective working lives, actually they
themselves are quite positive developed. So two key things in particular,
One is increased female participation after childbirth, So women in
(02:52):
particular are extending their working lives because you know, through
increased participation across a lot of development economies. And then
the second factory is the reduced importance of manual work.
So you know, historically when you have a large share
of manual works, I'm talking about things like you know, manufacturing,
but also mining, construction work. These are sectors where people
(03:17):
typically retire relatively young, and as you've had a reduced
share of an employment in those sectors, you've also therefore had,
by implication, an increase in effective working lives, as you've
seen a progression more towards office space work. So not
only is increased longevity in and of itself a positive development,
(03:40):
but I think that you know, we're seeing effective working
lives increasing in response to that, and the factors that
are drive that increase are themselves positive.
Speaker 2 (03:48):
Kevin, I wanted to draw down on your statement that
we are working longer. Now. I wanted to ask is
this mostly a Western developed phenomenon because we're sitting in
Asia and totally we hear that. For example, in China
we see job descriptions where they say they only want
applicants that are under the age of thirty five. There's
(04:09):
also anecdotally in Korea we hear that there's an unwritten
rule that you have to be younger than the CEO.
Speaker 1 (04:15):
And.
Speaker 2 (04:17):
That becomes an issue because CEOs are generally getting younger
and younger.
Speaker 3 (04:21):
You know, there is an uneven pattern across economies. But actually,
I think the evidence suggests that data suggests that you
are seeing a broad based increase in effective working lives,
and I think one needs to see why that is happening.
One needs to reflect on actually what are we talking about.
How long is an effect of working life? So if
(04:42):
you think of the typical what economists would define as
the working age ratio, which runs from fifteen to sixty five,
so that implies a fifty year working life. Actually, in reality,
on average people do not work fifty years. Some people do,
but on average, actually effective working lives is much more
of the order of around thirty five years. Why is
(05:04):
it so much shorter. It's so much shorter because a
lot of women in particular have traditionally left the workforce
after giving childbirth, and so their working life, at least
their paid working life is significantly shorter than the average.
So a lot of the increase that we're seeing in
effective working lives is coming not from people extending their
(05:25):
working lives into the sixties and seventies, but rather just
by filling more of the gaps in the forties and fifties.
Now across Asia, there are some examples where actually I
think more progress can be made in this regard in
terms of increasing female participation in particular. But the idea
that there is the pattern of increasing effective working lives
(05:45):
is something that we are seeing not just in the
West but also in Asian economies.
Speaker 1 (05:50):
Yeah, it makes you wonder if we should revisit as
a society perhaps or you know, certainly government officials and
economist this idea of a prime age worker, for example,
which only really runs to the sixties. But if we're
working longer hours, or rather we're working for longer, then
perhaps I need to be resident. Perhaps, you know, we
(06:11):
should be looking at things like the retirement age. I mean,
what are your thoughts there?
Speaker 3 (06:16):
Yeah, So, I mean what is interesting in you know,
in this research, And one of the things that we
try to emphasize is that it's not just that we're
living longer, we're also living healthier lives. It was a
very interesting research by the IMF that was published recently
where they had a meta study. They had a very
large study of a million data points taken from people
(06:36):
over the age of fifty and they're testing how cognitive
abilities and physical abilities of older people have changed over time.
And one of the really interesting things from that study
is that they found that a seventy year old person
today has broadly speaking, the same cognitive abilities as somebody
who was fifty three in the year two thousand. A
(06:58):
seventy year old today has a same physical abilities as
somebody who was fifty six in the year two thousand. So,
you know, in a very real and tangible sense, seventy
is the new fifty three. So it's not just that
we are living longer, but our abilities and our functional
capabilities are extending throughout our working lives. So we have
(07:19):
the capability also to extend our effective working lives.
Speaker 2 (07:23):
Okay, I heard that forties are the new thirties, but
I never heard that seventies and you fifty three? But
why is that, Kevin?
Speaker 3 (07:32):
It's you know, it's interesting. So some people are surprised
by this. But if you you know, I'm in my
early fifties, so I've been around long enough to remember
back to the eighties, nineties sitcoms and TVs of that era,
and some of the stars from that era are now
sadly passing away more recently. And it's funny when you
(07:53):
look at the pictures of the people from those eras
in many case these actors and even sports stars were
in their thirties at that time, and you look at
the pictures of them at that time, you go, these
are people who would now pass for being forty or
fifty year old now. So even in terms of how
you look, actually, I think there's been a significant change
(08:14):
in the process of aging. You know, not only are
we living longer, we're living healthier. We even look younger
than we did twenty thirty forty years ago.
Speaker 1 (08:23):
Why is that, like, is it just in medical developments?
Is it less smoking? Maybe, you know, cosmetics it is
I mean, it's to some degree, it's all of those things.
Speaker 3 (08:36):
But I think it is a focus much more on
healthier living. It is medical advances obviously are critically important,
but also, you know, a much greater focus on healthier living.
I mean, there was a you know, culturally, I think
back in the eighties and nineties, I think there was
a sense that you know, once you made it into
your thirties, that's you know, you sports for instance, sports activity, cycling,
(09:00):
even walking was something that people did in their childhood.
It wasn't something you did while you're working. Smoking the
amounts of smoking, drinking that people did in that area.
So we're living a lot healthier now than we did
at that stage. But as I say, medical advances as
well are clearly important in that asia.
Speaker 2 (09:18):
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(09:40):
you like what you hear, don't forget to subscribe and share. Kevin,
A lot of investors have talked about this concept of
the silver economy, the industries and companies that cater towards
the elderly. For example, in Hong Kong, one third of
the population will be over the age of sixty five
in about twenty years. But what do you think do
you think this is going to change consumption habits in
(10:02):
particular for the silver economy.
Speaker 3 (10:05):
So actually, one thing I should say, as a slight
segue to your question, is that Hong Kong. You know
you're interviewing me from Hong Kong. Hong Kong at the
moment does hold the record for the Hong Kong represents
the longevity frontier. So life expectancy in Hong Kong is
eighty six at the moment.
Speaker 1 (10:22):
So what is.
Speaker 3 (10:23):
Interesting is that when demographers look at what they describe
as the longevity frontier, so this is the country or
region that has the highest life expectancy at the moment.
At the moment, the region with the highest life expectancy
is Hong Kong at eighty six years, But fifty years
ago it was Iceland at seventy five years, and one
(10:46):
hundred years ago it was Australia at sixty three years.
And what's interesting if you look in the longevity in
that frontier, it has been growing at a very stable
rate of a quarter of a year per year for
more than one hundred and fifty years, and repeatedly demographers
have expected projected that this improvement has to tail off,
(11:10):
there has to be some cap on life expectancy, but
repeatedly and consistently year and year out, its defied those
expectations and continue to grow at a quarter of a
year per year every year. Now, overall global life expectancy
has actually increased even faster than that because there has
(11:31):
been in the last fifty years some convergence to the frontier.
So the improvements in countries with relatively low life expectancy
has been even faster than in the frontier. But what
is interesting that that frontier, so the peak of longevity,
has continued to steadily increase over time.
Speaker 2 (11:50):
Didn't the US have a drop in life expectancy or
was that just an anomaly.
Speaker 3 (11:55):
It did, and it is in the sense that, yeah,
over the last ten years there has been a drop
in life expectancy. There are some other individual countries where
one has also seen that, so the UK be another example.
So this improvement is not that it's in every country
every place, all the time, but on average there is
(12:16):
a significant improvement, and certainly in the frontier there is
an improvement.
Speaker 1 (12:19):
I mean, it sounds like if you want to live
a longer life, you probably have to move to Asia.
That's the message that I'm coming.
Speaker 3 (12:25):
Over, Yeah, or live relatively healthy lives. Maybe it's an
issue of diet. Turning to your question, I think that
this portrayal that because people are living longer, there's going
to be a big shift in relative demand towards things
that quote unquote old people require. I think that is
(12:45):
wrong in quite a fundamental way. And the reason for
that is that, you know, all this research that I
quoted suggested that it's not just that we're living longer
in old age, we're actually extending each part of our lives.
So where we're younger for longer, we're middle aged for longer,
we're older also for longer. A lot of these studies
(13:05):
that look at the implications of a silver economy almost
treat everything up to the age of sixty five as fixed,
and it's just that we've got a much more extended
period from sixty five onwards. The research that we have done,
the research that the IMF have done and that others
have done, have suggested that all parts of our working
lives are longer, and so therefore one should be no
(13:25):
more investing in or focusing on things specific to older people.
Then one should be focusing on things specific to younger people,
because we're going to be younger for longer as well.
So you know, one key implication. For instance, if your
effect of working life in reality is going to be
longer now than it would have been twenty thirty, forty
years ago, then it makes sense to invest more in
(13:48):
your education as well, because to invest in the skills
that you will require for a longer working life. So yes,
let's invest in goods and services targeted for older people,
but let's invest in goods services targeted for younger, middle
aged people as well.
Speaker 1 (14:03):
So your point there being that it's not just that
we're going to have this wave of people in the
later stages of their life. Your point is that because
we're living longer lives, the buckets devoted to every important
kind of segment of our lives that's also extending. So
we could maybe see a day where middle age extends
all the way up to sixty five for example, our
(14:25):
you know, our shopping habits don't change. But what I'm
wondering though, is like, as a share of the total population,
it is a reality that as a share, those that
are sixty five plus will make up a bigger chunk.
So doesn't that group have different interests and ways of
spending money that investors could benefit from, Like I don't know,
(14:47):
we were talking about like cruise ship operators before this,
or like, you know, other services.
Speaker 2 (14:52):
Pharmaceuticals. General leads perceive that older people consume more pharmaceutical products.
Speaker 3 (14:58):
In terms of health services, we are across the world
increase in our consumption of healthcare, you know, both pharmaceuticals,
but also the amount of money we're having to spend
on health. But to some degree that that reflects our
demand for the increase in health. We're prepared to pay
more to live these healthier lives. In a sense, it's
a good return on our investment given how much longer
(15:21):
and healthier we are living but cashier. To come back
to your question, I think we are. I mean, let's
take myself. I'm fifty two. My kids Sometimes joke is
that you're only middle aged if you're expecting to live
until you're past one hundred. You know, but love that.
But maybe I will live past one hundred is my
(15:42):
first response to that. But b I think most people
in their fifties now would still consider themselves to be
of middle age. But that probably wouldn't have been true
twenty thirty years ago. And the things that I am
demanding today, the goods and services that I am demanded today.
You know, I cycle into work every day. You know
I probably wouldn't have been doing that twenty thirty years ago.
So yes, you know, what a typical let's say sixty
(16:05):
five year old requires or wants or demands today, the
type of holidays they require is very different from what
it would have been twenty thirty years ago.
Speaker 2 (16:14):
Kevin. A lot of governments around the world have focused
on increasing or trying to increase the fertility rate. There's
been talk of some countries trying to even considering like
a baby bonus or you know, lower attacks to people
have more kids. What's your view on that.
Speaker 3 (16:31):
You know, as an economist, it's hardwired into my DNA
to believe that financial incentives work. So I mean, I
believe that those incentives are effective at the margin to
some degree, but the evidence suggests across countries they tend
to have smaller than hoped for effects, and those effects
are often relatively temporary. What I think would be more
(16:52):
effective in Ameliar eighteen the impact of or reduce fertility
and the impact of that on ultimately economic performance, will
be focusing on things like improving childcare so that women
can continue to work after they've had children. And actually,
in cross country studies, in different research that we have done,
(17:13):
we found in economies where it is easier for women
to both combine having children with working, actually both tend
to be higher. And I'm thinking of economies like Japan
where both were tradition but also financial incentives. There was
you know, often it was more unusual for women to
(17:34):
continue to work after having kids, or you found in
those economies where women face a choice either of working
or of having children, actually both tend to be lower.
Female employment is lower and fertility is lower. So if
you really want to encourage or improve fertility but also
to increase female employment, you should do as the Scandinavians do,
(17:54):
which is to increase the availability of childcare and make
it easier for women to both combine work with having children.
Speaker 1 (18:02):
On that point, you wrote this paper in two thousand
and seven about how fixing or addressing gender inequality could
actually boost economic growth as well, so raising some of
the stats, raising USGDP by as much as nine percent,
Eurozone by thirteen percent, Japanese GDP by sixteen percent. And
by the way, for the listeners, a lot of the
(18:23):
data that we've been talking about today is in this
Goldmin Sachs report, the Path to twenty seventy five The
Positive Story of Global Aging, and that's co authored by
Kevin Daily. You know, twenty years past that now, two
decades past that, now, how would you say those economies,
which some of them we've just talked about in terms
of offering incentives and trying to address this, but how
(18:44):
would you say that they've done on this front kind
of looking at globally, how are countries doing on that
front of kind of trying to encourage women.
Speaker 3 (18:53):
So this research was part of Golden Sacks as broader
women ONMICS research, which was first started with Kathy Matsui,
a former analyst for US in the Japan Office, and
it was focused in particular because it historically has been
a particularly big issue for Japan and the fact that
within the research that I did back in two thousand
(19:14):
and seven found that the benefit of reducing employment inequality
would boost Japanese growth GDP rather by sixteen percent, so
much bigger than most developed economies on average, reflect to
the fact that they were so much further behind that
they had so much you know, more inequality and employment
to address in most advanced economies. I think progress has
(19:37):
been made. It's been you know, there has been more
growth has come from female employment in particular, so there
has been some convergence. I would think of economies which
have done particularly well in closing that gap actually would
highlight Spain, where there's been quite a radical transformation. But
then there has been some economies that more recently have
done slightly less well in that regard. You know, the US,
(19:57):
the progress has been mixed. I think there's still a
lot of progress still to be made. So in Japan
that gap has closed somewhat, but it certainly could close
a lot more.
Speaker 2 (20:07):
Kevin, I have your GDP forecasts across countries through to
twenty and fifty and through to two thousand and seventy five,
and it's very interesting you think that there's going to
be a big change in which countries have the largest GDP.
In particular, China is going to overtake the US, but
you also have India there. Can you explain like how
these impacts the growth forecasts going forward.
Speaker 3 (20:30):
The aging research that we have done is part of
our broader Path to twenty seventy five research, which includes
these longer term GDP projections that you've mentioned, And one
of the key insights from these broader projectors is that
there will be a huge and has been and will
continue to be a huge growth in the relative importance
(20:52):
of Asian economies. In particular China is a classic example.
Back in two thousand, China represent only twelve percent of
US GDP. It's now of the order of seventy five
to eighty percent of USDDP. So there's already been a
very significant convergence in the size of China's GDP. But
looking forward, some of the countries that we think will
(21:15):
show the fastest growth or biggest convergence over time, are
now going to be India. Also, i'd highlight Indonesia. It's
an economy which is growing in significant size, and given
the demographic size of these Asian economies, I think over time, yes,
they will account for a much largest share of global
GDP than they do today.
Speaker 1 (21:34):
Yeah, you guys see Indonesia in twenty fifty, so in
twenty five years as the world's fourth largest economy, and
then by twenty seventy five still maintaining that hold. So
by twenty seventy five we've got China, followed by India,
followed by US and Indonesia and Nigeria. So is that
a story of population growth then, I mean Indonesia does
(21:55):
tend to have a higher birth rate fertility rate than
others globally.
Speaker 3 (22:00):
It's also primarily a story of the size of the
relative populations today as well. And it's interesting is that
when you publish this research you never quite know there
will always be one or two countries in particular that
it really sort of hits home and people focus on
and quite which those countries people are most surprised by.
It's difficult to anticipate before publication, but Indonesia is something
(22:23):
that has really caught people's eye. I mean, bear in mind,
we publish those projections in twenty twenty two. Actually, Indonesia's
growth in the years since then, I know it's not
a particularly long period, but has been faster than we
had within our projection. So, you know, much as people
may be skeptical about how much they will grow in
that in the medium to long term, so far, they've
been growing quite a bit faster than we anticipated in
(22:46):
the research. Our convergence assumptions on GDP per capita are
actually pretty cautious, so it is possible that countries will
fall short of that convergence projection. But I think there's
also up side risk in many cases, as Indonesia in
the last couple of years has shown.
Speaker 1 (23:04):
And overall, I'm just curious, because we started this conversation
talking about the upside of demographic shifts. Why do you
think it is that usually when we talk about this issue,
it's often framed in the negative. You know, we talk
about the rising costs, we talk about the weight on
the pension system. You're an economist, please.
Speaker 3 (23:27):
Tell us, I mean I am an economist, But I
actually think at some level it's a more basic human
emotion that we often confuse the impact of ourselves getting older,
which you know, intrinsically is a scary thing, and what
it means for our own futures as we personally age,
(23:49):
with the process of societal aging, which is quite a
different thing. Even if it is worrying for us personally,
the fact that we are getting older over time, it
doesn't mean the process more broadly for society of a
gradually aging society is negative economically in the same way.
And I think at some base level we almost confuse
(24:12):
those two concepts, and so our perception of the implications
of aging are tainted by our own fears for our own.
Speaker 1 (24:20):
Futures, existential dread. Speaking of existential dread AI and jobs.
So we're living longer, we're also working longer. You know,
governments are hopefully going to be able to help with
job retraining everything. But then there's this threat of AI
looming in the threat of dislocation of jobs. How concerned
should we be about that? Does that present a risk
(24:42):
to this outlook where we're going to be working longer.
Speaker 3 (24:45):
Lives AI we think will will increase productivity significantly over time,
which sounds very positive when economists put it like that,
but what does that mean in practice? Saying increasing product
we mean that actually a sensely we would be able
to do the same work with fewer jobs. So it
(25:06):
will be disruptive for individual sectors. It will be disruptive
for the workers that are directly involved. But we've seen
two hundred plus years of consistent technological improvements going all
the way back to the luodites, and much as that
the new technology back then, the mechanical weavers, was very
(25:27):
bad for the lod heightes directly. I mean they it
did put them out of employment, so it's very rational
from their perspective to be worried about that it didn't
result in an increase in aggregate unemployment. And I tend
to be more on the optimistic side in the sense
I tend to believe that this new technology, important as
it is in keeping with previous new technologies, will be
(25:50):
disruptive for the sectors that are directly affected, but won't
result in an increase in overall unemployment.
Speaker 1 (25:57):
Great, thank you so much for joining us today.
Speaker 3 (26:01):
Thank you very much, Cartian, Thank you John.
Speaker 1 (26:03):
You've been listening to Asia Centric from Blueberg Intelligence and
Kati Dimitriva on Hong Kong.
Speaker 2 (26:08):
I'm John Lee, also in Hong Kong. You can find
all our episodes on Apple Podcasts, Spotify or whereview listen
and this podcast was also produced and edited by Clara Chen.
Thanks for listening.
Hosts And Creators
John Lee
Tom Corbett
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