Buttonwood
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The rich are different
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Longevity and the pension age
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Dec 22nd 2012
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LIVE longer, work longer. As the developed world struggles with the cost of its greying population, a standard response has been to increase the state retirement age.
In a decade or two, retiring at 67 rather than 65 will be the norm.
But is such a change fair? Across the developed world, better-off people in the higher social classes tend to live longer than the poor. This gap has tended to widen, rather than shrink, in recent years. The result is that the poor get much less time to enjoy their benefits than the better-off.
This is not an easy problem to deal with. Since the rich have always tended to live longer, unfairness is built in to the very idea of a universal pension age.
And income levels are not the only determinant of longevity. There is also a gender gap: women tend to live longer than men. They are not asked to retire later to redress the balance.
Historically, one factor behind the poorer life expectancy of working-class men was the nature of their jobs. A life down the mines or unloading crates at the docks wore out the male body. Over time, the switch from a manufacturing to a services-based economy should reduce the importance of this.
So what else explains the gap between rich and poor? One possibility is access to health care. The better-off may benefit more from medical advances.
Studies* suggest that the longevity gap between rich and poor has widened by about a year in Britain since the early 1980s. In America the gap may have risen by almost five years since the 1970s.
In Britain, thanks to the National Health Service, there is little difference in treatment rates by income level for heart disease or in the receipt of stroke-prevention drugs. In America, however, access to health care for the uninsured is patchier. Studies show that low-income residents in the north-east of the country have both better access to health care and better mortality statistics than comparable residents in the south-west.
Lifestyle is probably more important still. Over the past 30 years one of the biggest factors in reducing mortality rates among 65-74-year-olds is related to a reduction in circulatory problems.
Part of that is the result of better treatment but the decline in smoking has also been a huge factor. An analysis of American counties found that a 5.9% rise in the percentage of adult smokers increased premature mortality rates by nearly 7%.
A probable reason for a narrowing in the gap between male and female life-expectancy in recent decades is the sharper fall in tobacco use among men. In contrast, the lifestyle gap between rich and poor has widened. Britons with no educational qualifications are five times more likely than those with higher education to smoke, drink excessively, eat poorly and skimp on exercise.
The pattern varies between countries. In France there is less of a gap between the smoking habits of rich and poor.
Nevertheless, a cross-European study of 40-65-year-olds found that mortality rates could be reduced by 23% in men and 16% in women if those on low incomes behaved only as riskily as the better-off.
There is no consensus on why these lifestyle differences persist. Some argue that the stress of being poor leads people to smoke more and eat unwisely. But it seems likely that there is a strong cultural component. In America there are marked differences in the health profiles of Hispanics and blacks at the same income level. It is probable that the decline in smoking among the better-off has also had a cultural element to it: the habit is no longer seen as socially acceptable in wealthier circles.
If the biggest reason for the longevity gap is lifestyle, then it is better to tackle the health issues directly than to delay changes to the pension age. Some countries’ occupational-pension schemes (for firemen, say, or the armed forces) allow workers to retire early because of the hazardous nature of their professions. But no one would suggest that smokers or the obese should be allowed to stop work ahead of everyone else.
However, there are implications for government pension systems, like that in America, which do not pay a flat-rate pension to all. The better-off are not only living longer but getting a higher income in the process. Currently only 85% of American government-pension payments are taxable, a tax break that delivers the biggest benefits to the well-off. Given the longevity gap and the size of the deficit, that is one loophole that should be closed.
“Trends in Mortality Differentials and Life Expectancy for Male Social Security-Covered Workers" by Average Relative Earnings” by Hilary Waldron, Social Security Administration
“Mortality improvement by socio-economic circumstances in England (1982 to 2006)” by J L C Lu, W Wong and M Bajekal
“The Promise of Prevention: The Effects of four preventable Risk Factors on National Life Expectancy and Life Expectancy Disaprities by Race and County in the United States” by Goodarz Danaei, Eric B Rimm, Shefali Oza, Sandeep C Kulkarni, Christopher J L Murray and Majid Ezzati
“Rising Mortality and Life Expectancy Differentials by Lifetime Earnings in the United States” by Julian P Christa, Inter-American Development Bank
“Social Inequalities and Mortality in Europe—Results from a Large Multinational cohort” by Valentina Gallo et al
“Two-Dimensional Mortality Data: Patters and Projections” by S J Richards, J R Elliam, J Hubbard, J L C Lu, S J Makin and K A Miller
“Health Behaviours, Socioeconomic status and Mortality: Further analyses of the British Whitehall II and the French Gazel Prospective Cohorts” by Silvia Stinghini, Aline Dugravot, Martin Shipley, Marcel Goldberg, Marie Zins, Mika Kivimaki, Michael Marmot, Severine Sabia and Archana Singh-Manoux
“Longer life—in better health?” Longevity Bulletin, November 2012, Institute and Faculty of Actuaries
“Disparities in Premature Mortality Between High and Low-Income US counties” by Erika Cheng and David Kindig, Centers for Disease Control and Prevention
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