The Graph on The Vanishing Workers Dependency and Workforce Discussion

Pensioners are an
underrated and
underserved
market
From adventure travel to dating websites,
older consumers display resolutely young
tastes
The “Economist” magazine. Special report.
July 6th 2017 edition
“THERE’S NOTHING WRONG with bingo
and chicken,” says Tom Kamber, before
explaining why you won’t find either in
the senior centre he runs in Manhattan.
Instead, members of the Senior Planet
Exploration Centre are given VR goggles
and other digital gadgets to play with,
though most head straight for a wall of
computers to check their Facebook
accounts or shop online. A group of 15
seniors, some in their 80s, clad in
sportswear, huddle around their fitness
coach. People come for classes on starting
their own businesses, using smartphones,
booking travel on the web and setting up
online dating profiles. “We just demystify
the technology and away they go,”
explains Mr Kamber.
Businesses could learn from this. With
longer lives, more free time and a lot of
cash, older people clearly present a “silver
dollar” opportunity. In America the over50s will shortly account for 70% of
disposable income, according to a forecast
by Nielsen, a market-research
organisation. Global spending by
households headed by over-60s could
amount to $15tn by 2020, twice as much
as in 2010, predicts Euromonitor, another
market-research outfit. Much of this will
go on leisure.
Yet the market has failed to respond to
this opportunity, even though it has been
clear for a long time that the babyboomers would start to retire in larger
numbers, in better health and with more
money to spend than any previous
generation. They feel much younger than
their parents did at their age, and most of
them have no intention of quietly
retreating from the world. “Retirement
used to be a brief period between cruise
ships and wheelchairs, with a bout of
norovirus,” says Joe Coughlin, who runs
the AgeLab at the Massachusetts Institute
of Technology. Now it has become a
complete new stage of life, as long as
childhood or mid-life, which boomers
want to structure very differently; “yet we
still offer my grandfather’s retirement.”
Over-60s adventure travel has become a
booming business opportunity. In
America more than 40% of adventure
travellers are over 50, according to the
Adventure Travel Trade Association. In
Britain older travellers are the largest
spenders in the industry, with the fastest
growth in the 65-74 age group. Instead of
comfortable cruises or bus tours, they
demand action, from expeditions to the
Arctic to cultural trips to Asia.
Jane Dettloff, a 73-year-old from
Minnesota, has just returned from a twoweek cycling tour in Chile. “The culture,
the cuisine, the beaches and—oof—the
Andes wine!” By day the 16 women, aged
61 to 87, pedalled, chatted and “felt like
young girls again”. By night they enjoyed
“wine-o’clock, without the whining about
pills”. The travel company that organised
the tour, VBT, does not explicitly bill itself
as a specialist in senior travel, but offers
subtle hints: “at your own pace”, “since
1971”, “good wine”. More than 90% of its
customers are over 50.
Out of date
Another emerging market is dating.
Whereas overall divorce rates are falling
in some countries, including America,
Australia and Britain, “silver splits” are
soaring as new pensioners suddenly face
the prospect of spending a lot more time
with their partner. Americans over 60 are
now getting divorced at twice the rate as
they were in 1990, and Britons at three
times the rate, write Lynda Gratton and
Andrew Scott in “The 100-Year Life”.
More than a quarter of the members of
Match.com, a popular dating website, are
between 53 and 72, and that group is
growing faster than any other.
Older people seem more concerned than
younger ones about the risks of online
dating, prompting the setting up of
specialised sites such as Stitch, an online
companionship site with 85,000
members. “There’s more fun to be had
after 50,” proclaims its promotional video,
adding that “it’s all very safe.” Older
customers seem more willing to pay for
online memberships than the young,
provided they add value. Stitch screens
members and organises social events,
explains Andrew Dowling, the co-founder.
“Most people want companionship, but
dating does change with age.”
Jody, from New Jersey, was inspired by
her nieces, who all use dating apps, and
ended up at a Stitch “drinks and mingling”
event in a trendy New York bar. It turned
out to be ten women sipping Margaritas,
laughing as they swapped experiences of
disastrous online dates and debating
whether they would be more likely to
meet a man if they went in for
predominantly male activities such as
mountain biking or golf.
Women spend more on trying to find a
companion than men, because in the
higher age groups there are more of them
(in the rich world they live an average of
five years longer), and they are more
likely to be single. In 2014 nearly threequarters of American men over 65 were
married and only one in ten was
widowed; of women in the same age
group, under half were married and one
in three was widowed. In Europe, too,
women over 65 are more than twice as
likely as men to be living alone. This can
be problematic if they lack adequate
savings, but also opens up new demand
for all sorts of things that hardly anyone
would have imagined a generation ago.
One is different sorts of accommodation.
With longer time horizons ahead of them,
the younger old are spurning lonely
granny flats and looking for something
more convivial, closer to a bachelor pad.
“Retired golden girl seeks two
cosmopolitan, easy-going, positive people
with a (wacky) sense of humour to share
this lovely, charming property,” starts an
ad on goldengirlsnetwork.com, a singlesenior housemate-finding website.
But businesses that want to get into this
new market of the younger old should
note that they are fussy. They do not see
themselves as old, and will respond badly
to ads specifically targeted at older people
(as Crest found when it launched a
toothpaste for the 50+ age group). The
over-50s are also intolerant of websites
or gadgets that underdeliver, says Martin
Lock of Silversurfers.com, the largest
over-50s community in Britain: “If
something doesn’t work, they’ll be the
first to leave.”
Between now and 2030, most of the
growth in consumption in the developed
world’s cities will come from the over60s, according to McKinsey, a
consultancy. So this is the market to go
for; but to provide the wherewithal, the
financial industry will first have to
reinvent itself.
The joy of living to
100
How to make the most of ageing
populations
The “Economist” Magazine. Special report.
July 6th 2017 edition
FOR MOST OF history humans lived only
long enough to ensure the survival of the
species. Today babies born in the West
can expect to see their grandchildren
have children. With more time come
many more opportunities for work and
pleasure, enriching individuals, societies
and economies alike. Whether mankind is
able to reap this “longevity dividend” will
depend on how those opportunities are
used.
By the early 2000s the state of health of
American men aged 69, as reported by
themselves, was as good as that of 60year-olds in the 1970s; 70 really does
seem to be the new 60. This report has
argued that if employers, businesses and
financial services adapt to make far more
of such people, big economic benefits for
everyone could follow. There are striking
parallels between the longevity dividend
now in prospect and the gender dividend
that became available when many more
women started to enter the labour market
in the 1970s. The last stage of life could
also be greatly improved by letting more
people retain their autonomy, often with
the help of technology.
Older people in multi-generation
teams tend to boost the productivity of
those around them
But for all those benefits to be realised,
two things need to happen. First,
employers must adapt to an ageing
workforce. Although the gig economy and
self-employment have been helpful in
allowing older people to carry on
working, the fact that they are so widely
used suggests that traditional employers
are often insufficiently flexible to
accommodate this new group.
The business case
Ageist recruitment practices and
corporate cultures can be big
impediments to keeping older workers
employed. Nearly two-thirds of this group
surveyed in America said they had
witnessed or experienced age
discrimination at work, according to the
AARP, a lobby group for the over-50s.
Legislation can help, but the best hope is
for employers to recognise that offering
opportunities to older workers is smart
business rather than a social duty.
Academics have found that older people
in multi-generation teams tend to boost
the productivity of those around them,
and such mixed teams perform better
than single-generation ones. Companies
that have taken this advice to heart, such
as Deutsche Bank, report fewer mistakes
and positive feedback between young and
old.
As one of the world’s oldest countries,
Germany offers other encouraging
examples. “It used to hurt in all the usual
spots,” says Andreas Schupan, grabbing
his back, elbows and shoulders. Aged 47,
he has worked on a production line at
BMW, a carmaker, for over 20 years. Now
a computerised cart does most of the
lifting for him, and he hopes to stay on for
another 20 years.
The second thing that needs to happen is
for the benefits of longer, healthier lives
to be spread much more equitably. As
things stand, greater longevity is
something of a lottery that favours the
well-off and the well-educated. Not only
do people in the rich world live
significantly longer than those in poor
countries, but huge differences in lifespan
persist even among rich-country
dwellers. In America the difference in
mortality rates among those with and
without a college degree has been
widening for the past 20 years.
Across the OECD, the average highly
educated 25-year-old man can expect to
live eight years longer than a
contemporary with only a basic education
(see chart). In Britain a baby girl born
between 2012 and 2014 in Richmond, a
wealthy area in south-west London, is not
only likely to live 3.4 years longer than
her equivalent in Tower Hamlets, a rundown part of east London; she will also
enjoy 14.5 more years in good health,
estimates Britain’s Office for National
Statistics.
The causes of such gaps in life chances
between haves and have-nots are well
known. Smoking, obesity, air pollution,
drugs and alcohol consumption all have a
strong, and in some cases growing,
influence on differences in life expectancy
within countries, says Fabrice Murtin of
the OECD. The best way to level the
playing field is to invest in public health,
offer universal access to health care and
provide high-quality education for
everyone. Unsurprisingly, in countries
such as Canada or Sweden, which attach
great importance to such matters, the gap
in life expectancy between the most and
the least educated people is much
narrower than it is in America.
Individuals will also have to take more
responsibility for unlocking their own
longevity dividend. In a survey of
Americans conducted by researchers at
Stanford University, 77% of respondents
said they wanted to live to 100, but only
42% claimed to be making a real effort to
get there.
Given the right input from governments,
employers and individuals, it should be
possible to stretch the increasingly
productive in-betweener stage and
compress the dependent period at the
very end of life. But that last stage will
always remain costly, and the state will
probably continue to pick up most of the
tab.
Estimates of life expectancy over recent
decades have regularly proved too
conservative. Some demographers
already think that children born in the
rich world today will routinely make it to
100. With vast sums being pumped into
fields such as stem-cell research,
regenerative medicine, biomedical
technology and genomics, human lives
could stretch well beyond that. If that
happened rapidly, it could prove highly
disruptive. Economies would suffer, social
tensions could erupt and progress on
gender equality might be reversed as
many more women were obliged to
become caregivers for the elderly. To
avoid such ill effects, societies and
economies must start in earnest to
prepare for those longer lives right now.
Vanishing Workers
Can the debt-fuelled model of growth
cope with ageing populations?
The “Economist” Magazine. July 23rd 2016
THE world is about to experience
something not seen since the Black Death
in the 14th century—lots of countries
with shrinking populations. Already,
there are around 25 countries with falling
headcounts; by the last quarter of this
century, projections by the United
Nations suggests there may be more than
100.
Such a shift seems certain to have a big
economic impact, but there is plenty of
debate about what that impact might be.
After the Black Death a shortage of labour
eventually led to a sustained rise in real
wages. If that trend were repeated, it
would come as a big shift after a
prolonged period of sluggish wage
growth, something that has fuelled
political discontent across the rich world.
A new report on the demographic outlook
by Berenberg, a German bank, focuses on
one important measure: the dependency
ratio. This compares the number of
children and the elderly with people of
working age (those aged 15-64). The
higher the dependency ratio, the greater
the burden on the workforce. In the
world’s biggest economies, America apart,
the workforce is set to shrink significantly
(see chart).
In many developed countries, the
dependency ratio rose after the second
world war (thanks to the baby boom), fell
in the late 1960s and 1970s as the
boomers entered the workforce, and has
recently started rising again. That history
makes it possible to analyse how
economies performed during periods of
both falling and rising ratios. Berenberg
based its analysis on ten rich countries:
America, Australia, Britain, France,
Germany, Italy, Japan, Spain, Sweden and
Switzerland.
The housing market seems an obvious
place to start. You would expect a
growing workforce to push house prices
higher, as wage-earners seek more space
for their families. Sure enough, the
authors find that, since 1960, the median
increase in real house prices when the
dependency ratio was decreasing (ie,
when there were relatively more
workers) was 2.7% a year. However,
when the dependency ratio was
increasing (ie, relatively fewer workers),
real house prices fell by 0.2% a year.
Similarly, as you might expect, real GDP
per person tends to grow faster (2.6%) in
years when the dependency ratio is
falling than in years when it is rising
(1.9%). Having more workers makes it
easier for the economy to grow. Inflation
also tends to be higher (4.1%) in years
when the dependency ratio is falling and
lower (2.7%) when the ratio is increasing.
That points to a problem. In recent
decades, the developed world has seen a
big surge in total debt-to-GDP ratios in
both the private and public sectors.
People tend to take on debt for two
reasons: to maintain their consumption
or to buy an asset (for individuals, often a
home). This requires a belief on the part
of the debtor (and the lender) that, at a
minimum, their future incomes and asset
prices will not both fall by a lot, so the
money can be paid back.
In a world of sluggish growth, low
inflation and stagnant house prices, debts
become much harder to pay off. Indeed,
that has pretty much been the picture
since the financial crisis in 2008: debt has
been shuffled around a bit (from the
private sector to the government) but
total debt-to-GDP ratios have not fallen.
The show has been kept on the road by
big reductions in interest rates, which
have enabled most borrowers to keep
servicing their debts. And demography
suggests that the era of low interest rates
is set to continue. Berenberg finds that,
since 1960, real interest rates have
tended to rise when the dependency ratio
is decreasing and fall when the ratio is
rising (as it is now forecast to do).
Low rates are in part a deliberate policy
by central banks to stimulate the
economy by encouraging people and
companies to borrow. But as workers age,
they are less likely to want to take on
debt. And if an ageing workforce means
slower growth, companies won’t want to
borrow to invest. So the policy may not
work. Indeed, the Berenberg study found
that since 1960, private-sector debt rose
almost three times as fast, relative to GDP,
in years when the dependency ratio was
decreasing than when it was increasing.
The big question is whether economic
growth and rising debt levels go hand-inhand, or whether the former can continue
without the latter. If it can’t, the future
could be very challenging indeed. To
generate growth in our ageing world may
require a big improvement in
productivity, or a sharp jump in labourforce participation among older workers.
To date, the signs on productivity are not
encouraging and elderly employment
ratios have a lot further to go.
What explains
America’s
mysterious baby
bust?
Hispanic Americans are having fewer
babies, as are city-dwellers
The “Economist” Magazine. Nov 24th 2018
In some ways, the Atlantic Ocean seems
unusually wide at the moment. Polls by
the Pew Research Centre show that
western Europeans take an increasingly
dim view of America, and not just its
president. On the other side of the ocean,
conservatives think that a clinching
argument against universal health care is
to call it European. Yet in other, more
intimate, ways the two continents appear
to be converging. American families are
increasingly hard to distinguish from
European ones.
Soon after the great recession hit
America, in 2007, the birth rate began to
fall. Many people lost their jobs or their
homes, which hardly put them in a
procreative mood. But in the past few
years the economy has bounced back—
and births continue to drop. America’s
total fertility rate, which can be thought of
as the number of children the average
woman will bear, has fallen from 2.12 to
1.77. It is now almost exactly the same as
England’s rate, and well below that of
France (see chart 1).
Although getting into Harvard will be a
little easier as a result, this trend is bad
for America in the long run. A smaller
working-age population makes Social
Security (public pensions) less affordable
and means the national debt is carried on
fewer shoulders. America could admit
more immigrants to compensate, but
politicians seem loth to allow that. The
baby bust also strikes a blow to American
exceptionalism. Until recently, it looked
as though pro-natalist policies such as
generous parental leave and subsidised
nurseries could be left to those godless
Europeans. In America, faith and family
values would ensure a good supply of
babies.
What changed? One possibility is that the
drop is little more than a mathematical
quirk. The total fertility rate is calculated
by adding up the proportions of women in
each year of life who had a baby in the
previous year. It is affected by changes in
birth timing. Suppose that all American
women have exactly two children. If a
cohort of women move to have those
children later, the fertility rate will
temporarily fall below two. This
happened in the late 1970s, when the rate
dipped to 1.74 before recovering.
To some extent, history is probably
repeating itself. In 2017 the mean age of a
first-time mother was 27, up from 25 in
2007. The teenage birth rate has halved in
the past ten years—something that Power
to Decide, a campaign group, attributes to
less sex and better contraception. Colleen
Murray, its senior science officer, says
that Obamacare has made long-acting
contraceptives like iuds available to more
young women. The trend of Americans
giving birth at ever older ages could run
for a while. In Europe, women’s mean age
at first birth is 29. In Japan it is 31.
Still, comparisons with Europe and Japan
are not exactly reassuring—both
countries have smaller families than
America. And with every passing year the
drop in American fertility seems less
temporary. Some data suggest that people
have come to desire small families. The
large National Survey of Family Growth
shows that 48% of American women with
one child expect not to have a second.
Some religious conservatives fear that a
broad cultural shift is under way.
According to Gallup, a pollster, the share
of Americans who never go to church has
risen from 10% to 27% since 2000. That
could be connected to falling fertility.
Churches tend to be in favour of
children—more so than the other places
where people hang out on the weekend,
such as gyms and bars. But it is hard to
disentangle cause from effect. What is
clearer is that America’s fertility rate is
being pulled down by two specific groups
of people: Hispanics and urbanites.
Hispanic women still have more children,
beginning at a younger age, than nonHispanic whites, blacks or Asians. But
their fertility rate is falling exceptionally
quickly. Between 2007 and 2017 it
dropped from three to two, pulling down
the national average. William Frey, a
demographer at the Brookings Institution,
a think-tank, points out that the recession
hit them hard. Many Hispanics worked in
the construction business, which
collapsed, and lost their own homes to
foreclosure. Hispanics are also
increasingly American. Two-thirds were
born in the country, and the proportion is
rising because immigration from Latin
America has slumped. They have
probably adopted American small-family
norms.
The fertility rate has fallen more sharply
in large cities than in smaller cities or
rural areas (see chart 2). Rents and prices
have soared, making it harder to afford an
extra bedroom. Lots of properties are
being built in city centres—but many of
these are tiny flats in towers. In 2006 only
27% of newly completed apartments had
fewer than two bedrooms. In 2017 fully
48% did.
Nir Shoshani of nr Investments, a
property developer in Miami, says some
of this change is driven by demography.
People are staying single and childless for
longer, so there is more demand for small
flats. But the towers are also rising
because politicians and officials want
them to rise. As in other cities, Miami’s
zoning laws have changed to favour little
boxes. A recent reform allows builders to
create homes of just 275 square feet.
It is possible that cities like Miami are not
only accommodating the growing ranks of
single and childless people, but are
actually creating more of them. Hill Kulu,
a demographer at the University of St
Andrews in Scotland, has found that in
England and Finland suburbanites and
small-town-dwellers have more children
than you would expect from looking at
other aspects of their lives. It is almost as
though extra bedrooms and child-friendly
neighbourhoods make children. Perhaps
the American family is becoming more
European because its cities are looking a
little denser and a little less suburban—
that is, a little more European.
Life expectancy in
America has
declined for two
years in a row
in 2012. Although unintentional injuries
caused just 6% of deaths in 2016, they
claim mostly people in the prime of their
lives. A young person’s death cuts average
life expectancy by more than the death of
an older person.
That’s not really meant to happen in
developed countries
The “Economist” Magazine. Jan 4th 2018
JUST as Americans headed home for the
year-end holidays, the Centres for Disease
Control and Prevention (CDC) issued its
annual report on mortality—which had
no news to celebrate. According to the
report, published on December 21st, life
expectancy in America fell in 2016, for the
second year in a row. An American baby
born in 2016 can expect to live on
average 78.6 years, down from 78.9 in
2014. The last time life expectancy was
lower than in the preceding year was in
1993. The last time it fell for two
consecutive years was in 1962-63.
Other statistics suggest that this alarming
trend is caused by the epidemic of
addiction to opioids, which is becoming
deadlier. Drug overdoses claimed more
than 63,000 lives in 2016. Two-thirds of
these deaths were caused by opioids,
including potent synthetic drugs such as
fentanyl and tramadol, which are easier to
overdo by accident and are becoming
more popular among illegal drug users.
According to the CDC, the leading causes
of death in 2016 remained heart disease
and cancer. But a category called
“unintentional injuries”, which includes
drug overdoses, climbed to third place—
from fourth place in 2015 and fifth place
The steepest rise in mortality was among
25- to 34-year-olds. In that age group
deaths per 100,000 people from any
cause increased by 11% from 2015 to
2016. Mortality from drug overdoses in
the same age group shot up by 50% from
2014 to 2016.
At the same time, the decrease in
mortality from heart disease and
cancer—which has been a chief driver of
the steady increase in life expectancy—
has begun to level off. As a result, further
increases in overdose deaths would
probably push life expectancy down
again. A decline for three straight years
was last seen in America a century ago,
when the Spanish flu pandemic ravaged
the world.
This outcome seems likely. According to
CDC officials, provisional data for the first
half of 2017 suggest that overdose deaths
continued to rise. Foot-dragging by
President Donald Trump’s administration
has not helped matters. On the campaign
trail in 2016, Mr Trump promised to take
on the opioid epidemic as a priority. So
far, his administration has not produced a
plan or appointed a “drug tsar” to oversee
a strategy to curb addiction. Nor has it
asked Congress to allocate the billions of
dollars needed to treat the estimated 2m
people hooked on opioids. The national
Public Health Emergency Fund has just
$57,000 on hand, because it has not been
replenished for years. States and local
authorities are setting up addictiontreatment services. But without new
money from federal sources, their efforts
will buckle under the weight of the
problem.
A continued decline in life expectancy
would leave America trailing even farther
behind other rich countries. Lives in
America are already two years shorter
than the average in the OECD group of 35
rich and soon-to-be-rich countries: life
expectancy is closer to Costa Rica’s and
Turkey’s than to that of Britain, France
and Germany. If the administration
cannot reverse this then—at least when it
comes to longevity in the Western
world—its policy might be described as
America Last.
Videos’ Links:
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These are comments from another discussion that I got a bad grade at:
Main post:
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A point was deducted for the incorrect discussion forum settings.
missing reflection
the main post is missing your own example (not example from the video)
response post:
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response is missing a question
Your response post is missing asking a question to further facilitate the discussion
Financing longevity
As lives get longer, financial models will
have to change
The “Economist” Magazine. Special report.
July 6th 2017 edition
IN 1965 ANDRÉ-FRANÇOIS RAFFRAY, a
47-year-old lawyer in southern France,
made the deal of a lifetime. Charmed by
an apartment in Arles, he persuaded the
widow living there that if he paid her
2,500 francs (then about $500) a month
until she died, she would leave it to him in
her will. Since she was already 90, it
seemed like a safe bet. Thirty years later
Mr Raffray was dead and the widow,
Jeanne Louise Calment, was still going
strong. When she eventually passed away
at 122, having become the world’s oldest
person, the Raffray family had paid her
more than twice the value of the house.
Underestimating how long someone will
live can be costly, as overgenerous
governments and indebted private
pension schemes have been discovering.
They are struggling to meet promises
made in easier times. Public pensions are
still the main source of income for the
over-65s across the OECD, but there are
big differences between countries (see
chart). In both America and Britain public
provision replaces around 40% of
previous earnings, but in some European
countries it can be 80% or more. Where it
makes up a big share of total pension
income, as in Italy, Portugal and Greece, a
shrinking workforce will increasingly
struggle to finance a bulging group of
pensioners.
Private pension schemes, which
supplement state provision, have been
shifting from defined-benefit plans, where
workers are promised a fixed amount of
income in retirement, to definedcontribution plans, where workers
themselves take on the risk. Such schemes
are good for employers but tricky for
individuals, who become personally
responsible for ensuring they do not
outlive their savings. The new stage of life
now emerging between work and old age
adds a further complication. To
accommodate these changes, the financial
industry needs an overhaul.
First, it has to update the rigid three-stage
life-cycle model on which most of its
products are based. Second, it needs to
resolve two opposite but equally
troubling problems: undersaving during
working life and oversaving during
retirement. The first puts pressure on
public provision, the second leads to
underconsumption as cash is left under
the mattress. Third, a more creative
approach is needed to the range of assets
that pensioners can draw on, including
their homes, which have so far played
little part in provision for old age.
“In a multi-stage life, the idea of hitting a
cliff-edge retirement at 65 and then living
off an annuity is outdated,” says Alistair
Byrne, from State Street Global Advisors,
a money manager. His clients, many of
whom intend to work past normal
retirement age, are asking for more
flexibility to get at their savings at a
younger age. They also want a secure
income for the last phase of life. “It’s not
at all obvious that the traditional pension
industry, which still sees life as a threestage event, will survive this transition,”
says Andrew Scott of the London Business
School.
Nothing in the kitty
Many people simply do not save enough.
Roughly 40% of Americans approach
retirement with no savings at all in widely
used retirement accounts such as IRAs or
401(k)s. In Britain 20% of women and
12% of men between 55 and 65 have no
retirement savings, according to Aegon.
Yet with the demise of defined-benefit
schemes, the increase in the retirement
age and the steady rise in life expectancy,
most of today’s workers will need to save
more than their parents did. Some of
them do not earn enough to put money
aside, but for many the problem is in the
mind: they consistently underestimate
how long they will live and overestimate
how long their money will last. As more
people become self-employed, getting
them to save for their old age becomes
ever more important.
One solution is to allow retirement funds
to be used more flexibly, which may
encourage people to save more. But
nudges are unlikely to be enough. “People
need a push,” says Myungki Cho, from
Samsung Life’s Retirement Research
Centre in Seoul. Some countries, such as
Denmark and the Netherlands, provide
such a push by making enrolment in
pension schemes more or less mandatory.
Short of that, auto-enrolment, recently
introduced in Britain, and auto-escalation
(increasing contributions over time) can
also make a difference.
Often people just need the confidence
that they really can afford to spend a
little more on themselves
At the same time many pensioners spend
less than they can afford, which creates its
own problems. Ronald Lee and Andrew
Mason have found that in most rich
countries the elderly are net savers. Since
they cannot be sure how long they will
live and what their state of health will be,
and have no way of predicting inflation,
interest rates and markets, some caution
is clearly in order. But Chip Castille, from
BlackRock, an asset manager, thinks
oversaving is often unintentional. “It
would be an extraordinary coincidence if
you saved exactly enough for retirement,”
he says.
This gets to the heart of why some
economists are pessimistic about greying
societies. In a phase when older people
should be spending freely, many are
accumulating wealth, says David Sinclair,
of the ILC UK. He thinks the greater
pension freedoms granted in Britain in
2015 are more likely to lead to frugality
rather than spending sprees.
Such “accidental” oversaving will increase
in a world of defined-contribution plans,
predicts Tony Webb, an economist at the
New School, in New York City. Given a
choice, people will assemble their own
kitties rather than buy annuities that
provide an agreed lifetime income in
exchange for a lump sum. If they die
young, the money will be a windfall for
their heirs. Similarly, since money locked
up in homes is difficult to get at during
the owner’s lifetime, much of this too will
be passed on, Mr Webb adds. Raising
inheritance-tax rates could make a
difference, but better insurance is equally
important. This dormant wealth, which is
often neither invested nor spent, is
stopping many of the younger old from
realising their full economic potential.
“Often people just need the confidence
that we’ve run the numbers and that they
really can afford to make that donation to
a charity, or spend a little more on
themselves,” says Kai Stinchcombe, from
True Link, a financial-advice firm for
pensioners.
Take care
Depending on where people live, how
much they earn and whether they have
family willing to care for them, one of the
greatest financial risks of ageing can be
end-of-life care expenditure. A 50-yearold American has a better-than-even
chance of ending up in a nursing home,
estimate Michael Hurd and colleagues
from RAND, a research organisation in
America. In Britain an official review in
2011 of long-term care reckoned that a
quarter of older people in Britain needed
very little care towards the end of life but
10% faced care costs in excess of
£100,000.
Most countries will need to find a mix of
public and private provision to pay for
long-term care costs. A well-functioning
insurance market should be an important
part of this, but care insurance has mostly
failed to take off. American providers who
piled in too enthusiastically in the 1990s
got burnt when customers needed more
care than expected, and are still haunted
by the experience. Low rates of return on
bonds have not helped.
Every country has its own peculiarities,
but four common factors help explain the
market failures. First, the future of public
care is uncertain. Second, despite or
because of this, many people think they
do not need insurance because the state
or their family will look after them. Third,
the market is subject to “adverse
selection”—the likelihood that insurance
will appeal only to those most at risk of
needing care. And fourth, care costs are
unpredictable and could spin out of
control in the future. As a result, insurers
either avoid the care market altogether,
or charge exorbitant premiums and add
lots of restrictions.
As with any big risk, pools need to be
large to make protection products work.
The easiest way to achieve this is to make
insurance compulsory, as in Germany.
One alternative is auto-enrolment in a
public-private scheme with an opt-out, a
method with which Singapore is
experimenting. At a minimum, some
government intervention—such as
providing a backstop for the most
catastrophic risks—seems to be required
for the market to establish itself. But
perhaps the biggest problem is that
government policies chop and change far
too often.
Insurers could help, not least by offering
more hybrid products such as life
insurance with the option of an advance
on the payout if customers need care, or
annuities that pay a lower-than-usual
income but convert to a higher-than-usual
rate if pre-agreed care levels become
necessary. And there is a need for clearer
guarantees against unexpected premium
hikes. Most importantly, though, insurers
will need to persuade people to enroll
long before they are likely to require any
care.
By far the most common reason for
someone needing long-term care is that
they are suffering from Alzheimer’s or
some other form of dementia. Globally
around 47m people have dementia.
Without a medical breakthrough this
number could grow to 132m by 2050,
according to the World Alzheimer’s
Report. One study found that people
suffering from dementia accounted for
four-fifths of all those in care homes
worldwide.
In the absence of other options, for many
people the ultimate insurance is their
home, though few homeowners see it that
way. In the rich world much of the wealth
of lower and middle-income households
is tucked away in bricks and mortar. With
house prices soaring in many countries,
releasing some of this equity could greatly
benefit asset-rich but cash-poor
pensioners, as well as the wider economy.
The most obvious tool for this is a reverse
mortgage, which lets homeowners
exchange some of their home’s equity for
a lump sum or a stream of income in
retirement. But it is not widely used. In
America fewer than 49,000 reverse
mortgages were sold last year, most of
them provided by only about ten banks.
Mis-selling scandals in the early days now
seem to have been resolved, says Jamie
Hopkins, of the American College of
Financial Services, but people find such
mortgages scary and worry that they
might lose their home. Because of the lack
of competition, the products also remain
expensive. Mainstream financiers could
help expand the market.
In the meantime, entrepreneurial emptynesters have found another way to sweat
their assets: Airbnb. The over-60s are the
fastest-growing group of hosts on the
home-sharing site and receive the highest
ratings. Almost half of older hosts in
Europe say the additional income helps
them stay in their home.
The longer that people live, the more
varied their life cycle will become.
Workers will take breaks to look after
children or go back to school; pensioners
will take up a new job or start a business.
Financial providers need to recognise
these changing needs and cater for them.
That includes helping to fund technology
that could vastly improve the final stage
of life.
Getting to grips
with longevity
Ageing populations could be a boon
rather than a curse. But for that to
happen, a lot needs to change first, argues
Sacha Nauta
The “Economist” Magazine. Special report.
July 6th 2017 edition
“NO AGE JOKES tonight, all right?”
quipped Sir Mick Jagger, the 73-year-old
front man of the Rolling Stones
(pictured), as he welcomed the crowds to
Desert Trip Music Festival in California
last October. The performers’ average age
was just one year below Sir Mick’s,
justifying his description of the event as
“the Palm Springs Retirement Home for
British Musicians”. But these days mature
rock musicians sell: the festival raked in
an estimated $160m.
There are many more 70-somethings than
there used to be, though most of them are
less of a draw than the Stones. In America
today a 70-year-old man has a 2% chance
of dying within a year; in 1940 this
milestone was passed at 56. In 1950 just
5% of the world’s population was over
65; in 2015 the share was 8%, and by
2050 it is expected to rise to 16%. Rich
countries, on which this report is focused,
are greying more than the developing
world (except for China, which is already
well on the way to getting old); the share
of over-65s in the OECD is set to increase
from 16% in 2015 to 25% by 2050. This
has knock-on effects in older age groups
too. Britain, which had just 24
centenarians in 1917, now has nearly
15,000.
Globally, a combination of falling birth
rates and increasing lifespans will
increase the “old-age dependency ratio”
(the ratio of people aged 65 or over to
those aged 15-64) from 13% in 2015 to
38% by the end of the century. To listen
to the doomsayers, this could lead not just
to labour shortages but to economic
stagnation, asset-market meltdowns,
huge fiscal strains and a dearth of
innovation. Spending on pensions and
health care, which already makes up over
16% of GDP in the rich world, will rise to
25% by the end of this century if nothing
is done, predicts the IMF.
Much of the early increases in life
expectancy were due not to people living
longer but to lower death rates among
infants and children, thanks to
improvements in basic hygiene and public
health. From the start of the 20th century
survival rates in old age started to
improve markedly, particularly in the rich
world, a trend that continues today. More
recently, life spans—the estimated upper
limits of average life expectancy—have
also been increasing. Until the 1960s they
seemed fixed at 89, but since then they
have risen by eight years, thanks in part
to medical advances such as organ
replacements and regenerative medicine.
The UN estimates that between 2010 and
2050 the number of over-85s globally will
grow twice as much as that of the over65s, and 16 times as much as that of
everyone else.
Warnings about a “silver time bomb” or
“grey tsunami” have been sounding for
the past couple of decades, and have often
been couched in terms of impending
financial disaster and intergenerational
warfare. Barring a rise in productivity on
a wholly unlikely scale, it is economically
unsustainable to pay out generous
pensions for 30 years or more to people
who may have been contributing to such
schemes only for a similar amount of
time. But this special report will argue
that the longer, healthier lives that people
in the rich world now enjoy (and which in
the medium term are in prospect in the
developing world as well) can be a boon,
not just for the individuals concerned but
for the economies and societies they are
part of. The key to unlocking this
longevity dividend is to turn the over-65s
into more active economic participants.
pensions will no longer be enough. This
special report will argue that a radically
different approach to ageing and life after
65 is needed.
Making longer lives financially more
viable requires a fundamental rethink
of life trajectories
This starts with acknowledging that many
of those older people today are not in fact
“old” in the sense of being worn out, sick
and inactive. Today’s 65-year-olds are in
much better shape than their
grandparents were at the same age. In
most EU countries healthy life expectancy
from age 50 is growing faster than life
expectancy itself, suggesting that the
period of diminished vigour and ill health
towards the end of life is being
compressed (though not all academics
agree). Yet in most countries the age at
which people retire has barely shifted
over the past century. When Otto von
Bismarck brought in the first formal
pensions in the 1880s, payable from age
70 (later reduced to 65), life expectancy
in Prussia was 45. Today in the rich world
90% of the population live to celebrate
their 65th birthday, mostly in good
health, yet that date is still seen as the
starting point of old age.
This year the peak cohort of American
baby-boomers turns 60. As they approach
retirement in unprecedented numbers,
small tweaks to retirement ages and
The problems already in evidence today,
and the greater ones feared for tomorrow,
largely arise from the failure of
institutions and markets to keep up with
longer and more productive lives.
Inflexible labour markets and socialsupport systems all assume a sudden cliffedge at 60 or 65. Yet in the rich world at
least, a new stage of life is emerging,
between the end of the conventional
working age and the onset of old age as it
used to be understood.
Those new “young old” are in relatively
good health, often still work, have money
they spend on non-age-specific things,
and will run a mile if you mention “silver”.
They want financial security but are after
something more flexible than the
traditional retirement products on offer.
They will remain productive for longer,
not just because they need to but because
they want to and because they can. They
can add great economic value, both as
workers and as consumers. But the old
idea of a three-stage life cycle—education,
work, retirement—is so deeply ingrained
that employers shun this group and
business and the financial industry
underserve it.
What’s in a name?
History shows that identifying a new life
stage can bring about deep institutional
change. A new focus on childhood in the
19th century paved the way for childprotection laws, mandatory schooling and
a host of new businesses, from toymaking
to children’s books. And when teenagers
were first singled out as a group in
America in the 1940s, they turned out to
be a great source of revenue, thanks to
their willingness to work part-time and
spend their income freely on new goods
and services. Such life stages are social
constructs, but they have real
consequences.
This report will argue that making longer
lives financially more viable, as well as
productive and enjoyable, requires a
fundamental rethink of life trajectories
and a new look at the assumptions
around ageing. Longevity is now
widespread and needs to be planned for.
The pessimism about ageing populations
is based on the idea that the moment
people turn 65, they move from being net
contributors to the economy to net
recipients of benefits. But if many more of
them remain economically active, the
process will become much more gradual
and nuanced. And the market that serves
these consumers will expand if
businesses make a better job of meeting
their needs.
The most important way of making
retirement financially sustainable will be
to postpone it by working longer, often
part-time. But much can be gained, too, by
improving retirement products. The
financial industry needs to update the
life-cycle model on which most of its
products and advice are based. Longer
lives require not just larger pots of money
but more flexibility in the way they can be
used.
As defined-benefit pension schemes
become a thing of the past, people need to
be encouraged to set aside enough money
for their retirement, for example through
auto-enrolment schemes. It would also
help if some of the better-off pensioners
spent more and saved less. They would be
more likely to do that if the insurance
industry were to improve its offerings to
protect older people against some of the
main risks, such as getting dementia or
living to 120. Many people’s biggest asset,
their home, could also play a larger part
in funding longer lives.
And for the oldest group, increasingly
there will be clever technology to help
them make the most of the final stage of
their lives, enabling them to age at home
and retain as much autonomy as possible.
Perhaps surprisingly, products and
services developed mainly for the young,
such as smartphones, social media,
connected homes and autonomous cars,
could also be of great benefit to the older
old.
But the report will start with the most
obvious thing that needs to change for the
younger old: the workplace. Again, there
are parallels with young people. Working
in the gig economy, as so many of them
do, may actually be a better fit for those
heading for retirement.
Slower growth in
ageing economies
is not inevitable
But avoiding it means tough policy
choices
The “Economist” Magazine. March 28th
2019
For the first time in history, the Earth has
more people over the age of 65 than
under the age of five. In another two
decades the ratio will be two-to-one,
according to a recent analysis by Torsten
Sløk of Deutsche Bank. The trend has
economists worried about everything
from soaring pension costs to “secular
stagnation”—the chronically weak
growth that comes from having too few
investment opportunities to absorb
available savings. The world’s greying is
inevitable. But its negative effects on
growth are not. If older societies grow
more slowly, that may be because they
prefer familiarity to dynamism.
Ageing slows growth in several ways. One
is that there are fewer new workers to
boost output. Workforces in some 40
countries are already shrinking because
of demographic change. As the number of
elderly people increases, governments
may neglect growth-boosting public
investment in education and
infrastructure in favour of spending on
pensions and health care. People in work,
required to support ever more
pensioners, must pay higher taxes. But
the biggest hit to growth comes from
weakening productivity. A study
published in 2016, for example, examined
economic performance across American
states. It found that a rise of 10% in the
share of a state’s population that is over
60 cuts the growth rate of output per
person by roughly half a percentage point,
with two-thirds of that decline due to
weaker growth in productivity.
Why are older economies less productive?
The answer is not, as one might suppose,
that older workers are. Though some
capabilities, notably physical ones,
deteriorate with age, the overall effect is
not dramatic. A study of Germany’s
manufacturing sector published in 2016
failed to detect a drop-off in productivity
in workers up to the age of 60. Companies
can tweak employees’ roles as they get
older in order to make best use of the
advantages of age, such as extensive
experience and professional connections.
Furthermore, if weak productivity growth
was caused by older workers producing
less, pay patterns should reflect that.
Wages would tend to rise at the beginning
of a career and fall towards its end. But
that is not what usually happens. Rather,
according to a recent paper by
economists at Moody’s Analytics, a
consultancy, wages are lower for
everyone in companies with lots of older
workers. It is not older workers’ falling
productivity that seems to hold back the
economy, but their influence on those
around them. That influence is potent: the
authors reckon that as much as a
percentage point of America’s recent
decline in annual productivity growth
could be associated with ageing.
How this influence makes itself felt is
unclear. But the authors suggest that
companies with more older workers
might be less eager to embrace new
technologies. That might be because they
are reluctant to make investments that
would require employees to be retrained,
given the shorter period over which they
could hope to make a return on that
training for those near the end of their
careers. Or older bosses might be to
blame. Research indicates that younger
managers are more likely to adopt new
technologies than are older ones. This
may seem obvious: older people’s greater
aversion to new technology is a cliché.
And at least anecdotally, greying
industries do seem more averse to
change.
If the evidence suggested that ageing
economies struggled primarily because of
slow-growing labour forces and fastgrowing pension costs, it would make
sense to focus policy efforts on keeping
people in work longer—by raising
retirement ages, for example. But if, as
seems to be the case, reluctance to
embrace new technologies is a bigger
issue, other goals should take priority—in
particular, boosting competition. In
America, increasing industrial
concentration and persistently high
profits are spurring renewed interest in
antitrust rules. The benefits of breaking
up powerful firms and increasing
competition might be even bigger than
thought, if conservative old firms are
thereby spurred to make better use of
newer technologies.
There are other measures that could help.
Removing barriers to job-switching, for
example by making benefits more
portable, could shorten average tenures
and help stop companies’ cultures
becoming ossified. Best of all would be
more immigration. An influx of young
foreign workers would address nearly all
the ways in which population ageing
depresses growth. It would not only
expand the labour force and create new
taxpayers, but would mean more and
younger companies, and greater openness
to new technologies. And there would be
plenty of willing takers in poorer
countries with younger populations.
No men for old country
Societies with lots of older workers are
also societies with lots of older voters,
however. Those voters are, on average,
more politically conservative than
younger people, and less likely to support
increased immigration. People of all ages
would gain from policies that boosted
growth and productivity. But given the
choice between a dynamic but unfamiliar
society and a static but familiar one, older
countries tend to opt for the second. In
hindsight, the demographic boom that
coincided with industrialisation in rich
countries may have had an
underappreciated benefit: it created a big
constituency in favour of embracing new
technologies and the opportunities they
provided.
Technology may at some point overcome
the stifling effect of ageing. In a new paper
Daron Acemoglu of the Massachusetts
Institute of Technology and Pascual
Restrepo of Boston University find that
when young workers are sufficiently
scarce, manufacturers invest in more
automation, and experience faster
productivity growth as a result. Robots
have yet to make a big impact in the
service sector and beyond, but as their
capabilities improve and jobs for younger
people go begging that may change. The
world could use more flexibility and
productivity now. But stagnation may end
eventually, once the robots are promoted
to management.
Black men in
America are living
almost as long as
white men
The chasm in life-expectancy that once
existed has nearly closed
The “Economist” Magazine. June 15th 2019
Back in 1980 when Harlem was still a
byword for poverty, criminality and the
decline of New York City, black men in the
neighbourhood had a worse chance of
living to the age of 65 than men in
Bangladesh did. At that time Harlem’s
residents—almost all of them black, and
many of them poor—died of heart disease
at double the rate of whites. They died of
liver cirrhosis, brought on by alcoholism
or hepatitis, at ten times the rate of
whites. And they were 14 times likelier to
be murdered. Today the prominent
corner of Malcolm X Boulevard and West
125th Street houses a Whole Foods, an
upmarket grocery chain, and life
expectancy is up to 76.2 years. That is still
five years behind the rest of the city, but
the gap is no longer so egregious.
The case of Harlem exemplifies a
remarkable trend in American public
health that is seldom noticed: the
persistent gap in life expectancy between
whites and blacks has closed
substantially, and is now at its narrowest
ever. In 1900, the earliest date for which
the Centres for Disease Control and
Prevention (cdc) publishes statistics, the
life expectancy for black boys at birth was
32.5—14.1 years shorter than for white
boys. Put another way, the typical black
boy had 30% less life to live. Incremental
progress, however fitful, was made for the
next century, but epidemics of
crack, hiv and urban violence threatened
to reverse it. By 1993, a peak year for
violent crime, the life-expectancy gap
between black and white men had
widened again by nearly three years, to
8.5 years.
But then it began a sustained, steady fall.
In 2011 the black-white gap had
narrowed to 4.4 years for men (5.7% less)
and just 3.1 years (3.8% less) for women.
Though progress then levelled off until
2016, the most recent year available from
the cdc, the trend is stable and not
reversing.
The downward trajectory can be
explained by several simultaneous
phenomena, not all of them cheerful.
Among the elderly, more of whom die
after all than the rest, the narrowing is
due to mortality from heart disease and
cancer declining faster for blacks than for
whites. But for premature deaths, racial
gaps—especially between black and
white men—have also narrowed because
of substantially reduced mortality from
homicide, the result of the great crime
decline, and hiv, the result of improved
medical therapies. Yet the emergence of
the opioid epidemic, which kills whites at
higher rates than other races, has also
hastened the racial convergence.
Criminologists still do not know why
violent crime and homicides began to
decline in the mid-1990s. A wide array of
theories have been proposed: the eroding
appeal of crack cocaine, mass
incarceration actually working as
intended, legalisation of abortion, less
lead poisoning of children and the
improving economy. But the public-health
consequences are abundantly clear,
particularly for black men who were and
remain the most frequent victims of
murder. Patrick Sharkey and Michael
Friedson, two sociologists, conducted a
thought experiment showing that life
expectancy for black men would have
been 0.8 years lower if homicide rates
had persisted at their levels in 1991. That
is a remarkably large health effect—on
the order of entirely eliminating obesity
among black men. The authors calculate
that 17% of the narrowing of the lifeexpectancy gap for black and white men
between 1991 and 2014 could be
explained by the unexpected halving of
the murder rate over that period.
the rate at which opioid overdoses killed
whites in 2017. Though blacks still make
up a majority of Americans killed by hiv,
the overall rates of death have
plummeted to around 10 per 100,000.
At the same time as lifespans have been
increasing for blacks, prospects for
whites, especially the non-elderly, have
sagged. This is mainly because of the
rapid increase in deaths from drug
overdoses, opioids chief among them.
Death rates for whites caused by all drugs
more than quadrupled from 1999 to
2017, and are now 32% higher than for
blacks. Historically drug epidemics have
disproportionately hit non-white
Americans. But of the 47,600 people
killed by opioids in 2017, 37,100 were
white. Opioid addiction, suicide and
overdose-related deaths all affect whites
at much higher rates than blacks. Some of
the reason for this may, ironically enough,
lie in racial discrimination.
A life-saving bias
Considerable improvement in the
treatment of hiv has also decreased
premature deaths for black men, who
were hammered by the epidemic. An
estimated 42% of the 1.1m Americans
living with hiv today are black, triple their
share of the population. At the peak of the
epidemic, around 1994, the virus was
killing blacks at an age-adjusted rate of
nearly 60 per 100,000—or three times
About three in four heroin addictions
began with a legitimate prescription. The
hotspots of the opioid crisis—the tri-state
meeting of Ohio, Kentucky and West
Virginia as well as rural New England—
where blizzards of pills were later
followed by a rise in overdose deaths, are
much whiter than the rest of the country.
“It is consistent with pretty different rates
of prescribing opioids. We supplied it
very differently to whites versus blacks in
these areas,” says Ellen Meara, a health
economist at Dartmouth College. “But we
also know that there’s a lot of racial
discrimination in our health-care system.”
Wherever they lived, blacks were less
likely to obtain legal opioids in the first
place. A study of pain-related visits to
emergency departments between 1993
and 2005—a period that overlaps with
the run-up to the crisis—shows that
whites were substantially more likely to
obtain an opioid prescription, even after
controlling for the reported severity of
pain and other factors. A wealth of studies
have found similar effects. Doctors are
also much more likely to stop prescribing
opioids for blacks after detecting illicit
drug use. In the case of opioids, racial bias
probably saved lives.
Despite improvements in the racial gap,
inequality in life expectancy by class and
income still remains. The cdc has begun
publishing estimates of life expectancy at
the census-tract (or neighbourhood)
level. Life expectancy at the 90th
percentile is 83.1 years compared with
73.1 years at the 10th. In Chicago, census
tracts a few miles apart can differ in
average life expectancies by two decades.
The estimates are quite closely related to
measures of income and poverty: a simple
regression shows that a five-percentagepoint increase in the poverty rate is
associated with a one-year decline in life
expectancy.
Research by Raj Chetty, an economist, and
his colleagues shows that the income gap
in life expectancy has been growing even
as the racial one has been declining. So
has the education gap. Although people
have long assumed that higher
socioeconomic status bought better
health, that was not as true for blacks as it
was for whites, says Arline Geronimus, a
public-health professor at the University
of Michigan. Now that is changing. “The
convergence is due to more affluent,
educated blacks living longer while lessaffluent, less-educated whites are not
living as long. It shouldn’t be interpreted
as though we’ve made great strides,” she
says. Even so, the improvements for black
men run counter to the drumbeat of
pessimism about race in America. Black
lives are longer.
I had some interesting readings in this part regarding the gig economy. I found this intriguing since I can
connect because I have worked in what is now referred to as the gig economy. Now, I work in two
occupations that I consider to be part of the gig economy. One is a photographer, while the other is a
self-employed Amsoil salesman. The advantage of having a job is that you may choose your own
schedule and pursue it as a hobby. For one thing, I like being able to make my own schedule and choose
the sort of work I want to do at any given moment. The gig economy has significantly increased the
number of individuals in the United States who are considering entrepreneurship. It is a self-employed
job that you own, thus the term independent contractor. Additionally, this puts you in a gray area with
regards to the government and how it is taxed. Now, suppose you are an independent contractor
carrying people, food, or freight for a huge organization such as Uber or Amazon. How would you fit into
a typical economy? Therefore, it is a source of contention in the United States. Which party exercises
control, the company, or the independent contractor? Additionally, how will all of this be taxed?

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