People today can generally expect to live longer and, in some parts of the world, healthier lives. The substantial increases in life expectancy underlying these global demographic shifts represent a human triumph over disease, hunger, and deprivation, but also pose difficult challenges across multiple sectors. Population aging will have dramatic effects on labor supply, patterns of work and retirement, family and social structures, healthcare services, savings, and, of course, pension systems and other social support programs used by older adults. Individuals, communities, and nations around the world must adapt quickly to the demographic reality facing us and design new approaches to financing the many needs that come with longer lives.

This imperative is the focus of a newly published special issue of The Journal of the Economics of Ageing, entitled Financing Longevity: The Economics of Pensions, Health and Long-term Care. The special issue collects articles originally written for and discussed at a conference that was dedicated to the same topic and held at Stanford in April 2017 to mark the tenth anniversary of APARC’s Asia Health Policy Program (AHPP). The conference convened top experts in health economics and policy to examine empirical and theoretical research on a range of problems pertinent to the economics of aging from the perspective of sustainable financing for long lives. The economics of the demographic transition is one of the research areas that Karen Eggleston, APARC’s deputy director and AHPP director, studies. She co-edited the special issue with Anita Mukherjee, a Stanford graduate now assistant professor in the Department of Risk and Insurance at the Wisconsin School of Business, University of Wisconsin-Madison.

The Financing Longevity conference was organized by The Next World Program, a Consortium composed of partners from Harvard University, Fudan University, Stanford University, and the World Demographic and Aging Forum, and was cosponsored by AHPP, the Stanford Institute for Economic Policy Research, and the Stanford Center on the Demography and Economics of Aging.

The contributions that originated from the conference and are collected in the Journal’s special issue cover comparative research on more than 30 European countries and 17 Latin American countries, as well as studies on Australia, the United States, India, China, and Japan. They analyze a variety of questions pertinent to financing longevity, including how pension structures may exacerbate existing social inequalities; how formal and informal insurance interact in securing long-term care needs; the ways in which the elderly cope with caregiving and cognitive decline; and what new approaches might help extend old-age financial security to those working outside the formal sector, which is a major concern in low-income countries.

Another challenge of utmost importance is the global pension crisis, caused due to committed payments that far exceed the saved resources. It is a problem that Eggleston and Mukherjee highlight in their introduction to the special issue. By 2050, they note, the pension gap facing the world’s eight largest pension systems is expected to reach nearly US $400 trillion. The problem cannot be ignored, as “the financial security of people leading longer lives is in serious jeopardy.” Indeed four of the eight research papers in the special issue shed light on pensions and inequality in income support for older adults. The other four research papers focus on health and its interaction with labor force participation, savings, and long-term care.

The issue also features two special contributions. The first is an interview with Olivia S. Mitchell, a professor at the University of Pennsylvania’s Wharton School and worldwide expert on pensions and ageing. Mitchell explains the areas offering the most promise and excitement in her field; discusses ways to encourage delayed retirement and spur more saving; and suggests several priority areas for future research. The latter include applying behavioral insights to questions about retirement planning, improving financial literacy, and advancing innovations to help people imagine themselves at older ages and save more for their future selves.

The second unique contribution is a perspective on the challenges of financing longevity in Japan, based on the keynote address delivered at the 2017 Stanford conference by Mr. Hirotaka Unami, then senior Director for policy planning and research of the Minister’s secretariat of the Japan Ministry of Finance and currently deputy director general with the Ministry’s Budget Bureau.

In Japan, decades of improving life expectancy and falling birth rates have produced a rapidly aging and now shrinking population. Data released by Japan’s Statistics Bureau ahead of Children's Day on May 5, 2019 reveal that Japan’s child population (those younger than 15) ranks lowest among countries with a total population exceeding 40 million. In his piece, Unami focuses on the difficult tradeoffs Japan faces in responding to the increase in oldest-old population (people aged 75 and over) and the overall population decline. Japan aspires to do so through policies that are designed to restore financial sustainability for the country’s social security system, including the medical care and long-term care insurance systems.

Unami argues that Japan must simultaneously pursue a combination of increased tax revenues, reduced benefit growth, and accelerated economic growth. He notes that these three-pronged efforts require action in five areas: review Japan’s pension policies; reduce the scope of insurance coverage in low-risk areas; increase the effectiveness of health service providers; increase a beneficiary’s burden according to their means; and enhance policies for preventive health care for the elderly.

The aging of our world’s population is a defining issue of our time and there is pressing need for research to inform policies intended to improve the financial well-being of present and future generations. The articles collected in the Financing Longevity special issue and the ongoing work by APARC’s Asia Health Policy Program point to multiple areas ripe for such future research.

View the complete special issue >>

Learn more about Dr. Karen Eggleston’s work in the area of innovation for healthy aging >>

Something as simple as, "Are you taking your medications?" could conceivably prolong a life.

The study, detailed in a new working paper released this week by the National Bureau of Economic Research, was co-authored by Petra Persson, an assistant professor of economics; Maria Polyakova, an assistant professor of health economics at Stanford School of Medicine and core faculty at Stanford Health Policy; and Yiqun Chen, a doctoral student in health economics at Stanford School of Medicine. Persson and Polyakova are both faculty fellows at the Stanford Institute for Economic Policy Research (SIEPR).

Their study tackles the issue of health inequality and specifically examines the effects of having access to informal health expertise by having a doctor or nurse in the family. It finds that those with relatives in the health profession are 10 percent more likely to live beyond age 80. They are also significantly less likely to have chronic lifestyle-related conditions, such as heart attacks, heart failure and diabetes.

Younger relatives within the extended family also see gains: They are more likely to have been vaccinated, and they have fewer hospital admissions and a lower prevalence of drug or alcohol addiction.

In addition, the closer the relatives are to their familial medical source – either geographically or within the family tree – the more pronounced the impact of the health benefits, according to the findings.

The researchers used data from Sweden, where lotteries were used in the early 2000s to break ties among equally qualified applicants for admission into medical schools. The researchers then compared the health of the family members of lottery winners against lottery losers – a setup similar to a randomized control trial.

The strong findings of health benefits funneled from a familial sphere of medical knowledge suggest it would be worth ramping up access to health expertise in our health care system, the researchers say.

A doctor, for instance, could prescribe statins – a type of drug known to lower the risk of heart attacks – but whether the patient continues taking it from day to day is a decision made at home.

“Our work shows that there is a lot of value in trying to improve people’s decisions about their investment in their own health,” Persson says.

“If the government and health care system, including public and private insurers, could mimic what goes on inside families, then we could reduce health inequality by as much as 18 percent,” she says, referring to a main finding of the study.

Intra-family transmissions of health-related expertise might encompass frequent nagging to adhere to prescribed medications, get vaccinations or refrain from smoking during pregnancy, and “these behavioral changes are – from a society’s perspective – simple and cheap,” the study states.

Disparity despite access

The study also reveals limitations to the impact of equal access to medical care, underscoring the importance of other health efforts.

The researchers compared mortality data of Sweden – where there is universal access to health care – to the United States. They found the overall mortality was lower in Sweden but the level of health inequality largely mirrored that of the United States. In Sweden, despite its extensive social safety net, the rich also live longer and the poor die younger. Specifically, among people alive at age 55, more than 40 percent of individuals at the bottom of the income distribution in Sweden will have died by age 80 – as opposed to fewer than 25 percent for those at the top of the distribution.

“This health inequality appears to be extremely stubborn,” Persson says. “We can throw a universal health insurance system at it and yet substantial inequality persists. So, is there anything else that can help us close that health gap between rich and poor?”

According to their latest research, yes.

Health effects from having a medical professional in the family were substantial and occurred across the income spectrum, according to the study. And because the effects from the exposure to medical expertise was often even stronger for those at the lower half of the income distribution, the researchers estimated that information-driven behaviors could make a significant difference in getting rid of health disparities.

Closer ties, less churn

The study did not examine the complexity of family dynamics or specific actions that led to the positive health effects, but the researchers hypothesize that the mere presence of a medical professional in the family translates somehow to either a heightened health culture or, at least, having a coach of sorts to encourage healthy, good-patient behavior.

Although general public health campaigns (e.g., “Get Your Flu Shot Today!”) may not carry the same level of influence as intimate dinner-table discussions or persistent prodding among family members, there could be other ways society can improve its exposure to medical expertise to lead to healthier, longer lives, the researchers say.

Community health worker or nurse outreach programs can perhaps lead to more targeted, personalized communication efforts, they say. Digital nudges delivered through mobile phone apps could potentially make healthy dents.

Reminders of preventive care can also come by way of closer patient-doctor relationships and more consistent, longer-term ties to the same doctor.

“The idea of continuity of care and developing a true relationship with your doctor, who becomes someone who pays attention to you as an individual and sees you and your family over a long period of time, is well known,” Polyakova says. “Today, it’s what they might call old-fashioned primary care, where the whole family goes to the same doctor for many years. Many countries, the U.S. included, appear to be moving increasingly away from this model, and our results suggest that we might want to do the reverse.”

The finding of how a closer family connection or closer proximity leads to even stronger health outcomes helps substantiate the potential difference a closer bond between any doctor and patient could make – improvements that would be hard to glean from rushed and infrequent medical appointments, Persson and Polyakova say.

Communication-focused health initiatives don’t have to come with hefty price tags either, they say.

“We pour a lot of resources into getting even fancier machines inside hospitals, but the things that are making a difference here are not that expensive,” Persson says of their findings. “These are cheap, easily scalable preventative investments that are translating to gains in longevity, which is remarkable.”

Sweden’s medical school lotteries

Using large-scale data from Sweden, the researchers focused on quantifying the role of informal exposure to health expertise via a medical professional in the family while avoiding results that would be muddled with other differences between individuals with and without a doctor in the family.

The researchers used two different approaches. First, they took advantage of the fact that in some years, lotteries were used to break ties among equally qualified applicants to Sweden’s medical schools. This allowed the researchers to use medical school application records and track the health of family members of applicants who won and lost the lottery.

The researchers looked at more than 30 years of continuous health and tax records spanning four generations of family members, and examined health-related outcomes of the extended family members of newly trained doctors and nurses – including their siblings, parents, grandparents, children, aunts, uncles, cousins and in-laws.

Second, researchers sought to double-check whether higher income and higher social status associated with the medical profession had anything to do with the positive health benefits they found.

One of the ways they did this was to draw a comparison to lawyers, a similarly paid profession. The parents of doctors, they found, were 16 percent more likely to be alive than the parents of lawyers 20 years after their children matriculated. The parents of doctors also faced lower prospects of lifestyle-related chronic diseases.

In addition to the higher likelihood of their parents living past age 80 and the lower likelihood of heart diseases, the relatives of health professionals showed higher levels of preventive behaviors, including purchases of heart and blood-thinning medications, and vaccinations for HPV, or human papillomavirus. Younger family members also had fewer hospital admissions and addiction cases.

“People with health professionals in the family essentially make preventative investments that everyone should be doing,” Persson says.

In Beijing’s bustling Chaoyang District stands a multi-story building known as the Gonghe Senior Apartments: a 400-bed nursing home for middle-income seniors who are disabled or suffer from dementia. Why is Gonghe unique and why is it worth considering? Because Gonghe is a public-private partnership (PPP), a collaborative organizational structure supported by the District Civil Affairs Bureau Welfare Division that donated the land and building and the nonprofit Yuecheng Senior Living that operates the facility. And because PPPs like Gonghe might just be the right model to address the challenges surrounding elderly care in China as well as in other nations that face a looming burden of population aging.

This was a core message shared by Alan Trager, founder and president of the PPP Initiative Ltd., who spoke at a special workshop organized by Shorenstein APARC’s Asia Health Policy Program (AHPP). Focused on PPPs in health and long-term care in China, the workshop was part of a two-day convening related to the Innovation for Healthy Aging project, a collaborative research project led by APARC Deputy Director and AHPP Director Karen Eggleston that identifies and analyzes productive public-private partnerships advancing healthy aging solutions in East Asia and other regions.

The Innovation for Healthy Aging project is driven by the imperative to respond to a world that is aging rapidly. This demographic transition, reminded Trager at the opening of his talk, is a defining issue of our time, as aging is a multisectoral issue that increases the demand for health care, long-term care, and a large number of other social services. The aging challenge is exacerbated by its convergence with the rising prevalence of non-communicable diseases (NCDs), also known as chronic diseases. For while NCDs affect all age groups, they account for the highest burden among the elderly.

China: Ground Zero for Global Aging

Alan Trager discusses health and long-term care in China in the GSB's Highly Immersive Classroom

The need to advance healthy aging and NCD prevention is a matter of grave concern in China, whose older population is larger than in any other country. Moreover, the aging challenge in China is interwoven with unique social trends. In particular, filial piety—which, for thousands of years, has been a fundamental family value and a mainstay of health and elder care—is under pressure, as young people strive to balance the demands of careers, fewer children per family, and migrating to cities for school and work, without affordable housing or long-term care financing support for their parents and other elderly relatives, who often stay in rural areas.

China’s health system is yet to adapt to the shift in the disease burden and health care needs driven by the aging population. Its existing health insurance programs are insufficient for outpatient management and care of chronic conditions, and as Trager emphasized, there is a lack of investment in training geriatric medicine professionals and incorporating geriatric principles into clinical practice.

How can China meet the high demand for elder care, increase workforce capacity, and promote healthy aging?

The answer, claims Trager, lies in developing multisector, integrated solutions to the challenges posed by population aging. While system-level efforts, such as building the social protection system and sustaining universal health coverage, continue to be led by the government, PPPs can play a major role in capacity building to ensure the sustainability of such systems through the advancement of technology, human resources, and innovation. Trager shared PPP Initiative Ltd.’s recent efforts to develop PPP solutions for aging populations in China and elsewhere. The workshop was held on October 10 at the Stanford GSB’s Highly Immersive Classroom, which is equipped with advanced video conferencing technology that allows participants in Palo Alto and at the Stanford Center at Peking University to collaborate in real-time. Experts from Beijing joined the discussion and followed Trager’s presentation with comments on how to move from awareness to action.

Private Efforts, Public Value

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Public-private collaborations—or rather collaborative governance–in China as well as in the United States is the subject of an upcoming volume co-authored by Eggleston with Harvard scholars Richard Zeckhauser and John Donahue. Both Zeckhauser and Donahue joined Eggleston the following day, October 11, at an AHPP-hosted seminar to discuss this upcoming publication, titled Private Roles for Public Goals in China and the United States: Contracting, Collaboration, and Delegation.

Eggleston, Donahue, and Zeckhauser define collaborative governance as private engagement in public tasks on terms of shared discretion, where each partner bears responsibilities for certain areas. Their upcoming book explores public-private collaborations in China and the United States, two countries where public needs require solutions that far outstrip the capacities of their governments alone. Beyond considering merely health and elderly care, the book features research into public and private roles in the governance of multiple other sectors, including education, transport infrastructure, affordable housing, social services, and civil society.

At the seminar, the three scholars reviewed different models of private efforts providing public value, outlined the justifications for collaborative governance, and explained some of the conditions that make such collaborative partnerships productive and valuable. They emphasized the need to account for the unique contexts in China and the United States and to steer clear of one-size-fits-all solutions.

Imperative for the Young Generation

One thing, they all agree, applies to both countries: government collaboration with private entities is inevitable if China and the United States are to achieve their articulated goals and meet rapidly increasing demand for high-end public services.

This sentiment echoed a claim Trager made the preceding day: a tidal wave of noncommunicable diseases in an aging world is approaching us quickly and governments cannot handle it alone. Young people must care about advancing creative solutions to this pressing problem because they will be the ones who will pay for the consequences if we get it wrong.

A new book published by the Shorenstein Asia-Pacific Research Center (APARC) explores the future of China’s urbanization. Addressing the complex challenges facing Chinese cities will require updated institutions and unparalleled innovation, researchers say.

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Japanese and American scholars and practitioners gathered at Stanford recently for “Womenomics, the Workplace, and Women,” a full-day conference seeking to find pathways to advance opportunity for women in society and the workplace.

Nearly 75 people attended the public conference, which included 20 speakers and was co-sponsored by Stanford’s Shorenstein Asia-Pacific Research Center and the Clayman Institute for Gender Research, as well as the United States-Japan Foundation and the Japan Society for the Promotion of Science.

Takeo Hoshi, director of the Japan Program at Shorenstein APARC, noted that women in Japan and the United States have long encountered obstacles related to gender. Currently, the United States and Japan rank 45^th and 111^th, respectively, on the Global Gender Gap Index.

“The conference is a unique opportunity for experts from Japan and Silicon Valley to learn from each other and their countries’ recent attempts to tackle gender diversity, particularly in the areas of business and technology,” Hoshi said.

The Japanese government’s inclusion of women’s advancement in its economic growth strategy 'Abenomics,' named after Prime Minister Shinzo Abe, is “one of the few good policies,” Hoshi said, yet complex cultural constraints and workplace policies need to change in order for it to work. Similarly, in Silicon Valley, while strides have been made, gender diversity still lags in corporate leadership and boards of directors especially in the areas of STEM (science, technology, engineering and mathematics).

Panelists shared perspectives on women’s status, leadership and work-life balance in both countries throughout four panel discussions led by Hoshi, and Shelley Correll, director of the Clayman Institute and professor of sociology; Kenji Kushida, Japan Program research scholar; and Mariko Yoshihara Yang, a visiting scholar at Shorenstein APARC.

One broad theme that emerged in the discussions: gender equity progress takes time. Closing the gender gap will come incrementally and a multidisciplinary approach could help the process. 

Areas highlighted by the panelists included a need to address unconscious bias and to improve programs that support women in the workplace as well as those seeking to re-enter the labor force after taking time off, such as increased access to childcare and elimination of “evening work” for those who hold full-time jobs.

Panelists suggested expanding educational opportunities, mentorship and peer-to-peer networks among women, as well as training centered on gender equity for all employees. Quotas and government incentives for organizations that adopt equity practices were also proposed to achieve greater female representation.

Additional discussions took place between the panelists in a closed-door workshop the following day. A report that details outcomes and a set of policy recommendations is expected in 2017; the full list of panelists, topics addressed and conference agenda can be viewed here.