The multi-billion pound cost of ageism
A recent World Economic Forum (WEF) report highlights the huge costs of ageism in lost productivity and additional healthcare costs.
Our Content Officer Steve James looks at some of the report’s key findings which show how longevity represents one of the most consequential and addressable drivers of economic growth for countries of all demographics.
People living longer should be seen as a positive aspect of the human story. Unfortunately, all too often in the media or in policy discourse, longevity or the growing ageing population is viewed as a looming and growing problem.
All too often, a growing ageing population is depicted in simplistic economic calculations that focus only on assumed additional costs. Rarely are the economic benefits of a growing ageing population considered or properly assessed, or how projected costs can be significantly reduced with preventative mitigations.
Hoping to help reset the argument, WEF has collected data on 21 countries – and its quantitative analyses tell a different story.
WEF's The Longevity Dividend report has concluded that three low-tech interventions could save the world’s healthcare systems more than $5.8 trillion and unlock another $645 billion in productivity by 2040.
Fall-proofing homes, increasing levels of physical activity and expanding the use of hearing aids are affordable and simple examples that produce considerable returns when they are understood in the wider context of the longevity economy.
The report outlines how longevity represents one of the most consequential, addressable, and underestimated potential drivers of economic growth for countries of all demographics. It demonstrates how co-ordinated approaches that link health improvements to financial resilience will yield multitrillion-dollar opportunities in the years to come.
Here are some of the key extracts and findings from the WEF report:
1) Ignoring the 50+ workforce is harming the UK economy
The report found that the cumulative productivity loss from the underemployment of adults aged 55–70 between 2025 and 2040 in the UK could exceed more than £18 billion.
Super-aged countries, those where 20% of the population is 65 or older, have some useful lessons to offer.
South Korea has achieved a record 70% employment rate for adults aged 55 to 64 - a 10% increase in less than two decades. In Japan, employment policies have focused on tackling labour shortages and the country has seen employment levels for workers aged over 65 increase for 20 consecutive years.
The report adds that both these countries have relatively less workforce ageism which is very likely a factor in their high 50+ employment rates. Other studies have found that both Japan and South Korea have lower levels of stigma against older people because of their collectivist cultures, which appear less biased towards older people as they focus more on group cohesion and harmony.
In South Korea there has been a record 70% employment rate for adults aged 55 to 64, which represents a 10% increase in less than two decades. Meanwhile, in Japan, employment policies have focused on tackling ageism, leading to the country having employment levels for workers over 65 increase for 20 consecutive years.
Japan's productivity loss from the underemployment of adults aged 55–70 between 2025 and 2040 is five times smaller than the UK's. Singapore's productivity loss is 85 times smaller than the UK’s, despite its total economic output being around six times smaller than ours.
Ageism is incompatible with economic growth. It is estimated that in OECD countries, there will be nearly $500 billion in productivity losses by 2040 because of the exclusion of people aged 55+ from the labour market.
2) Ageism is harming health and economies
Research suggests that ageism is linked to 17 million incidences of disease and ill-health in the United States alone including cardiovascular disease, chronic respiratory disease, musculoskeletal disorders, and diabetes.
Studies have explored the link between the different forms of ageism, discrimination aimed at older persons, negative age stereotypes, and negative self-perceptions of ageing, and healthcare costs amongst the 60+ population. Researchers have also explored how ageism occurring at both the structural level and individual level impact individuals.
The research shows how ageism affects individuals’ financial resilience and the health of populations. In 2018, ageism added at least $63 billion in extra health costs in the US alone. Studies show that ageism can also contribute to poor mental health, including depression, physical illness, and reduced access to healthcare.
Researchers have argued that the persistent status of ageism as one of the least acknowledged forms of prejudice may be due in part to an absence of quantifying its costs in economic terms, something they have tried to combat with their own research.
3) Retrofit homes to prevent falls
Older adults are at increased risk of falls in the home which can result in injury and a loss of independence. Even one fall can have an enormous impact on health and wellbeing, leading to complicated medical procedures resulting from serious injuries such as hip fractures. And in the worst circumstances, a hip fracture can be life-changing or fatal.
Every year, globally, there are an estimated 37.3 million falls that are severe enough to require medical attention. And as the older population increases, these numbers are only going to increase without change.
Research from WEF has shown that a high number of older adults live in homes lacking in accessibility features or adaptations that would make everyday living easier and safer.
The WEF report concluded that retrofitting homes can make a significant and positive difference. Research shows that if it’s caried out properly, retrofitting can prove to be much less expensive than ongoing medical intervention, rehabilitation, and longer-term care.
The report states that the cumulative financial benefit of retrofitting homes in the UK between 2025 and 2040 could be as much as $129 billion. Globally, retrofitting homes could prevent 400 million falls up to 2040; saving health systems $5.4 trillion and adding more than 280 million years of healthy life.
4) Make housing affordable
Unaffordable housing can have life-long impacts, forcing individuals into poor-quality, cramped, or isolated homes, removed from employment, education, and other services. The WEF report outlines how housing insecurity compromises both physical and financial health, which can create a vicious cycle of financial stress, medical expenses and reduced long-term savings.
It may surprise many to find that when compared globally, the affordability of UK rents and mortgage payments as a proportion of monthly income is considerably more affordable than elsewhere in the world. Nevertheless, the growing level of unaffordability is impacting people of all ages, notably among the growing number of older renters.
Among the novel proposals to tackle housing unaffordability, and coupled with incentivising retrofitting, the report proposes the concept of incentivising longevity-friendly behaviours, such as better mortgage rates after age-proofing measures have been applied to a home.
Conclusion
Historically, living longer has been perceived with ambivalence. Outwardly celebrated but also viewed with an eye wary of a perceived economic burden.
But the message from the WEF report is clear: longer lives should be seen as an opportunity that can benefit the individual.
Through tackling ageism, it’s possible for more people to stay in work that is rewarding and for more older people to be supported to engage with society, making a positive difference to their lives and others.
And by investing in homes, it’s possible to avoid an array of perennial health and social problems caused by poor housing.
The report makes clear that growing ageing populations should not be viewed as a death knell for a country's future prosperity. By looking at longevity differently, it’s possible to realise the benefits of untapped potential.