The economics of longevity – An introduction

Global life expectancy now stands at 71 years compared with 30 years in 1870. This fact increases the need to understand how we age and how that impacts our economic decision making. It also raises the issue of how we should change our life cycle behaviours, policies and institutions to adapt to these longer lives. The combination of these two factors leads to a very different focus from the traditional interest of an ageing society and its focus on changes in the age distribution of society. It emphasises the need to understand a longevity society and changes in how we age. Given the importance of intertemporal decision making and the life cycle model in economics the implications of longevity for economic research offers rich pickings across a range of areas covering health, human capital, employment, financial decisions and macroeconomics. Understanding the changes in how we age in response to longer lives and identifying the channels to ensure that longer lives are welfare enhancing should be a fruitful and important area for research.