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Middle age deaths worsen generation gap

Conflict between economic and political power

by Brian Reading in London

Fri 31 Mar 2017

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The death rate among white working class Americans aged 50-54 is increasing, according to a study from Princeton University. Researchers Anne Case and Angus Deaton say drugs, alcohol, homicide, and suicide are largely to blame. Their observations accord with a World Health Organisation study, published this month in the UK medical journal The Lancet, which says that Americans have a shorter life expectancy than people in other advanced economies. The study estimates that by 2030 Americans will have the same life expectancy as Mexicans. This is despite the US spending more per head on health than any other country when public and private sector costs are combined.

Demographic projections are made on the assumption that life expectancy at all ages will continue to increase. As ‘baby boomers’ (those born between 1945 and the 1960s) retire, the ratio of older people to the working age population will rise. The baby-boomers’ children are now prime-aged workers. If worker mortality rates rise rather than fall as projected, the imbalance between the economically active and inactive will be exacerbated.

Demographic forecasts are often wrong. In the 1950s I was taught the economics of declining populations based on the low fertility rates of the 1930s global depression. Birth rates for those of or approaching child-bearing age are extrapolated from women who are past or nearly past child-bearing age. But this makes no allowance for changes in economic conditions or other factors that influence the decision to have children.

The potential effects of a change in migration policy under the Trump administration add to this uncertainty. Evidence from the UK shows that foreign-born women of child-bearing age account for some 14% of population and a quarter of all births. In recent years fertility rates have been revised upwards, meaning there will be more young dependents.

Medical progress and the decline in smoking continues to extend life expectancy among baby-boomers and those past retirement age. Major causes of death such as cancer, heart attacks and strokes can be prevented or postponed. Older people were more physically active for much of their lives. Their immune systems are stronger too because food and personal hygiene was lax when they were younger.

Stagnant incomes and job insecurity must contribute to the rising mortality rate among younger people. Yet US middle-age mortality rates continued to fall during the great depression of the 1930s, so something more is going on. New middle-age killers have replaced the old. Obesity is a scourge, leading to diabetes, heart disease and depression. The US average body mass index is one of the highest among advanced economies. Superbugs, with their resistance to antibiotics, have become a threat too.

In Russia mortality rates have soared since the collapse of communism, helped by much cheaper vodka. One month’s average income in Russia today buys 47 litres against seven before the fall of the USSR. A quarter of Russians die before the age of 55, against 7% in America.

The Princeton and WHO studies may be hints of what is to come. A fall in life expectancy for the working age population will exacerbate the growing imbalance between the ‘idle old and young’ and the ‘active middle’. The decline is most pronounced in middle to lower income classes.

These cycles must be measured in decades. In 20-30 years, the situation is likely to reverse. But in the short to medium term, the ramifications may include a pivotal conflict between the older generation’s political power and working age economic power.

Brian Reading was an Economic Adviser to Prime Minister Edward Heath and is a Member of the OMFIF Advisory Board.

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