The Impact of Aging on Public Policy

Most of Peter Hicks's research papers that can be accessed on SSRN are relevant to current policy issues or to current policy analysis. This 1996 article, while dated in its specific policy advice, is being made accessible in order illustrate the long lags in understanding and the over-simplifications that influence current policy discussions. The OECD work of the 1990s rejected much early thinking that had treated the policy implications of demographic change (mainly population aging) as being almost entirely related to volume effects – particularly the ‘crisis' that was seen as a result of the coming dramatic increase in the size of the population over the age 65 relative to the working age population. The article and much associated OECD research during that period concluded that this type of single perspective analysis was misleading. In particular, serious policy analysis must take account of behavioural as well as volume changes, a concept that the OECD referred to as ‘active ageing.' The article points to a more nuanced policy responses with policy action on multiple fronts. (The article, published in the OECD Observer in December 1996, summarized the policy implications of a more technical OECD study that preceded the ground-breaking 1998 OECD publication, Maintaining Prosperity in an Ageing Society, ISBN 92-64-16093-0). Yet, even today in Canada, much dialogue around the policy implications of demographic change is limited to volume effects and ignores the equally important effects of changing behaviours. For example, a 2012 paper by this author (which can be accessed on SSRN at 'http://ssrn.com/abstract=2041464' http://ssrn.com/abstract=2041464) shows how misleading volume assumptions continue to be built into the analytic tools that are used in macro-economic, fiscal and labour market forecasting.The current reader of this 1996 article is invited to observe a paradox. Its analysis and conclusions seem reasonable and contemporary – perhaps overly-general and even self-evident. Yet much of the policy-related policy research and analysis that takes place today continues to be based solely on the volume assumptions that have been known to be misleading for some 15 years. That is, many of our current tools of analysis tend to lead us away from the correct, and even, obvious policy directions