The Influence of Age on Consumption

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gws Discussion Paper 2012/x ISSN 1867-7290 Figure 3: Population projection by age groups [in 1000] 4000 6000 8000 10000 12000 ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● 18−25 25−35 35−45 45−55 55−65 65−70 70−80 80+ 2015 2020 2025 2030 Source: Statistisches Bundesamt (2012e), own calculations Figure 4: Projection <strong>of</strong> income components (in thousand Euro per capita) and the unemployment rate (in %) based on INFORGE net income other than wealth wealth income unemployment rate (%) [in 1000 Euro per capita and %] 5 10 15 20 2015 2020 2025 2030 Source: GWSmbH (2012), own calculations c○GWSmbH 2012 15
gws Discussion Paper 2012/x ISSN 1867-7290 4.2 Projection Results <strong>The</strong> development <strong>of</strong> aggregate consumption as well as the consumption <strong>of</strong> food, beverages and tobacco and recreation and culture is shown in figure 5. <strong>The</strong> figures for the other consumption purposes can be found in the appendix (figure 7). <strong>The</strong> continuous line represents the baseline, i.e. the original results from INFORGE. <strong>The</strong> dashed line is produced by the new projection results where the age coefficients are included. Aggregate consumption does not deviate much from the baseline which coincides with the picture given in figure 2 <strong>of</strong> section 3.3. <strong>The</strong> negative impact <strong>of</strong> the very young and the very old consumers on aggregate consumption is equalised by the opposed development <strong>of</strong> the representative population shares. <strong>The</strong> number <strong>of</strong> the young (18-35 years) and the old (70 years and older) people decrease/increase by about the same amount. So the accumulated negative influence remains approximately the same and leads to the low discrepancy between the two curves. But the development <strong>of</strong> aggregate consumption does not reveal the differences between the single consumption purposes. <strong>The</strong> pictures for food and non-alcoholic beverages (topright) as well as health (bottomleft) show that a change in the population composition can have visible impact. With regard to the consumption <strong>of</strong> food and non-alcoholic beverages the high negativity <strong>of</strong> the coefficients relating to the age groups 70 to 80 years and older in combination with the ageing process in the population results in a growth path that is much lower than the baseline. In 2030 the expenditures are only 88% <strong>of</strong> the originally assumed amount. On the other hand the demographic change has positive consequences for health consumption. Due to the decreasing share <strong>of</strong> the younger age groups the negative coefficients have less influence on the expenses. <strong>The</strong> age group coefficients <strong>of</strong> the increasing number <strong>of</strong> older people affect consumption positively. Demand for health products and services hence lies 25% above the baseline in 2030. c○GWSmbH 2012 16
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The Influence of Age on Consumption

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