Addressing the Challenge of Global Ageing—Funding Issues

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Addressing the Challenge of Global Ageing—Funding Issues and Insurance Solutions
2. Global ageing
The world population has just reached a total of seven billion people in 2011. Historically
there has been a long-term growth trend since the early days of the agrarian revolution that
was only sporadically disrupted by wars, famine and epidemics. This trend accelerated
with the advent of industrial production. Over all these centuries, fertility rates always
remained well above the replacement rate (usually understood to be 2.1 children per
woman). It is a rather recent phenomenon that growth rates would turn negative in certain
countries despite the absence of wars, famine or epidemics. However, this declining trend
seems to spread around the globe and the United Nations projects more growth rates to
turn downward or remain negative in the coming decades (United Nations, 2010).
Populations throughout the world are ageing due to two basic demographic trends,
namely increasing life expectancy and declining fertility rates. Various factors are
usually raised to explain these phenomena. While life expectancy increase is due largely
to lifestyle improvements, rising wealth and medical advances, the decrease in fertility
rates is generally explained by birth control, higher female educational attainment and
participation in the labour force, and changes in lifestyle and societal values.
While ageing is global, however, there are important international differences in the
speed and extent of the ageing process. Among the developed countries, Europe and
Japan already have much older populations than North America. Italy and Germany are
ageing faster than France and Great Britain. In Asia, some countries such as China start
from a relatively young population, but due to the one-child policy ageing is occurring
rapidly. It is still unclear why countries differ in their ageing process and some possible
explanations of fertility rates such as social security systems or female participation are
not totally understood and open to some interpretation (Cigno, 1995).
Over the past century, longevity has accelerated for most countries almost linearly by two
years per decade. Projections on longevity predict a gain of around 1.2 years per decade
over the next 50 years (United Nations, 2010). Expectations of global ageing naturally
depend on longevity and fertility forecasts. However, both fertility and longevity trends
are to a certain degree controversial. For instance, concerning fertility rates, some studies
support the idea of a fertility cycle, with alternative periods of boom and burst of fertility
(Van Wissen, 2004). Based on this idea, the current decline in fertility would be in part
explained by a shift over time of the date at which a woman has her first child. A possible
increase in fertility rates could thus be expected in these countries. On the contrary,
other studies tend to show that fertility rates do not follow cycles but are subject rather
to sudden changes (Bonneuil, 2003). This suggests that future developments are more
uncertain than often assumed.
In the same vein, longevity trends are also debatable and in particular healthy life
expectancy, i.e. life expectancy in good health. Over a long period, increases in life
expectancy at birth have corresponded with improvements in the health of populations.
However, now that chronic diseases are progressively replacing infectious diseases, the
prevalence of chronic disease in the population usually increases as a result of longer
survival. Three theories have thus emerged regarding healthy life expectancy. The first
anticipates an improvement in the state of health and a compression of morbidity (Fries,
1980), the second a decline in the state of health and an expansion of morbidity (Kramer,
1980), and the third, a dynamic equilibrium (Manton 1982) where, though the prevalence
of morbidity increases as mortality falls, the prevalence is on average less. Many unknowns