Can We Afford to Grow Older?

Can We Afford to Grow Older?

By Richard Disney





The United States Social Security fund is huge and in trouble. The United Kingdom has experimented with the voluntary contracting out of pensions to the private sector. Chile has privatized 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 labor force 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 relative to 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 technical foundation, this will be a standard reference on the economic consequences of aging. Richard Disney adopts a "life-cycle" view of the world which recognizes that individuals often make plans with a forward-looking perspective across the stages of childhood, the peak of economic productivity, and retirement. He stresses the existence of overlapping generations and the reality of generational transactions (which include tax and transfer systems, bequests, and charity to the elderly). And he assumes intertemporal optimization as a useful unifying basis for analyzing social security, private pension schemes, lifetime labor-supply decisions, consumption, and saving. Among the surprising conclusions that emerge is that there is no "crisis of aging"—no adverse effect of aging on productivity. And although there are serious crises in pay-as-you-go social insurance programs and in health care, these have little to do with aging. Moreover, the shift in private provision plans away from traditional defined- benefit plans will continue, along with an interest in privatized pensions instead of social security.


Out of Print ISBN: 9780262041577 360 pp. | 6 in x 9 in


$30.00 X ISBN: 9780262517096 360 pp. | 6 in x 9 in


  • Richard Disney sets out what we know about the implications of an aging population for the workings of an advanced economy, and performs the signal service of pulling it all together in one place. Anyone who is interested in any aspect of this area will be able to go first to this book to find out what we know. There is no other comparably comprehensive source.

    Stephen Nickell

    Institute of Economics and Statistics, Oxford University

  • Can We Afford to Grow Older? Describes and analyzes the implications of population aging on a range of interrelated issues. Disney provides an interesting combination of technical economic theory and rich institutional detail that will be of interest to a wide audience.

    Joseph F. Quinn

    Professor of Economics, Boston College

  • Using the state of the art behavioral models and a wide range of empirical evidence from the UK, the US, and many other countries, Richard Disney carefully and thoroughly assesses the effects of population aging on productivity, social insurance, pensions, labor markets, and savings. Richard Disney's book will be an important reference for scholars, graduate students, and policymakers interested in the rapidly emerging area of the economics of aging.

    Alan Gustman

    Loren M. Berry Professor of Economics, Dartmouth College; and Research Associate, National Bureau of Economic Research

  • Richard Disney's fact-based, yet engaging survey is as broad as the subject, covering issues from pensions to healthcare, and from productivity to saving. Indeed, Richard Disney provides a perspective—his perspective, and the fun from reading his survey stems from Disney's many provocative conclusions that run counter to conventional wisdom and will certainly spark discussion.

    Axel Boersch-Supan

    Professor of Economics, University of Mannheim

  • There has been much alarmist discussion about the economic consequences of aging. Disney has produced a balanced and lucid review of economic analysis of aging issues, including considerable new research on pensions, savings, and retirement in Britain.

    John Ermisch

    University of Essex, United Kingdom

  • Can We Afford to Grow Older? is an impressive book which makes a major contribution toward the consolidation of our knowledge and understanding the economic aspects of what appears to be inevitable and probably irreversible demographic change. Covering a wide geographic spectrum across industrialized nations, it will appeal to graduate level study of the economics of aging and will appeal to all economists with a serious interest in this question.

    William J. Serow, Director

    Center for the Study of Population,and Professor of Economics, Florida State University