Posted 01/30/2008 - 12:45:30pm by David Bank
Stanford professor John B. Shoven has a provocative proposal for figuring "inflation-adjusted age."
In the latest issue of Foreign Policy, Shoven argues that, just as a 1960 dollar is not the same as a 2008 dollar, neither is a 1960 lifespan the same as a 2008 lifespan. Since 1960, Shoven points out, the average lifespan of a Chinese person has increased by 36 years, a South Korean by 24 years, a Mexican by 17 years and a French person by nearly a decade.
"Just as with the dollar, it is time to introduce inflation-adjusted ages as a superior method for measuring age," Shoven writes. Instead, he suggests mortality risk -- the chance a person has of dying within the next year -- as a more accurate view of health, productivity and life expectancy.
When the Social Security system was launched more than 70 years ago, a 65-year-old man could expect to live another 11 years. Now, men at that age can expect 17 more years. That is, a 65-year-old man today is the same "real age" as a 56-year-old man in 1940, according to Shoven.
The implications challenge many of the dire forecasts of the coming demographic shift, in which older adults make up an increasing share of the population in nearly all countries. In 2000, 35 million people in the U.S. were over 65; by 2050, the number will be 87 million. But only 62.5 million, or about 15 percent of the population, will have a mortality risk of greater than 1.5 percent. "That's hardly a demographic tidal wave," Shoven writes.
Shoven's argument has obvious implications for pensions, Social Security and "retirement age," in general. He argues that he's not advocating shortened retirements, just stabilized ones, after a century in which the average length of retirement grew from two years to more than 19 years.
"If benefits and retirements are governed by mortality risk instead of age, the costs will be far more manageable," Shoven concludes. "We've witnessed dramatic improvements in life expectancies over the past century. It's time we dramatically improve the way we measure age as well."