Is there a wealth dividend of aging societies?

Apocalyptic views on the social, economic and health consequences of aging abound. This review examines the potential upside of aging, in particular from a public health perspective. First, we review the evidence on whether there is healthy aging in the sense of a compression of morbidity: people spending fewer of the life years gained in poor health. The evidence turns out to be decidedly mixed, depending on the country, the data and perhaps most critically on the definition of "health" considered. Second, we explore the potential and actual labour market impact a healthy elderly population could make. We find considerable support for the notion that if only effective retirement age was raised to reflect past and future increases in life expectancy, then the result could be a significant increase in elderly labour force participation rates. Moreover, a significant share of the already retired elderly population is in good health, indicating a potential unused capacity for the labour market. Third, we turn to the impact of improved health (especially among the elderly) on healthcare expenditures. In general, evidence does not support the optimistic expectation that improved health will mitigate or even reverse the trend of increasing health expenditures. Even if better health may, in some circumstances, lead to lower healthcare spending, other cost drivers, in particular technological advances, will more than outweigh any such expenditure-reducing effect. On the other hand, there is not much support for the hypothesis that better health by itself is a major cost driver. Policy can make a difference in facilitating the realisation of the potential benefits of a healthy aging scenario. This does, however, require a coordinated approach between social, economic and health policy and will enter into policy arenas in which the political costs of reform, despite their expected societal benefits, may become a bottleneck that is hard to overcome.