Longevity and Economic Growth
Andrew Price pointed me to an interesting paper on mortality (and, by extension, life expectancy) and economic growth, via Bradford Plumer.
Analyzing a variety of cross-national and sub-national data, we argue that high adult mortality reduces economic growth by shortening time horizons. Higher adult mortality is associated with increased levels of risky behavior, higher fertility, and lower investment in physical and human capital. Furthermore, the feedback effect from economic prosperity to better health care implies that mortality could be the source of a poverty trap.
I think that there are other factors at work in the African regions that are the focus of their paper, such as rapacious governance, absence of the rule of law, and so forth. Life expectancy and mortality in the economic boom times of the 18th century in Europe weren't much better than the worst of Africa today, after all. The basic concept is a good one, however, and we should turn it around and ask ourselves how much more economic growth could we experience if healthy life spans were greatly extended? I think it to be eminently sensible to view short-termism in the management of public companies, to pick one example, as a function of our life spans. Short-termism would still exist if we lived twice as long, but there is every reason to think that it would be lengthier short-termism, with less of the sacrifice of long term gains.
What long-term and potentially very profitable opportunities do we set aside because aging and death require us to hasten everything along - and because aging and death destroy more value than all the natural and man-made disasters worldwide each year? Now there is something to think on.
Technorati tags: economics, life extension
By today's standards growth in 18th century Europe was extremely slow, <1%/year.
The impact on growth of longevity is a very interesting topic. The massive destruction of human capital by morbidity and mortality is astonishing.
Hmm, true: "Since 1820; growth of per capita income has accelerated. For the entire world per capita income grew at an annual rate of 0:5% per year, between 1820 and 1870: Between 1870 and 1950 the yearly rate was 1:1% and since then the growth rate of world-wide income per capita was about 2:1% per year." That is a world average, but still implies that the growth rate in Europe wasn't so good even in the boom times.
Families and community must now invest in nearly 20 years of education, which must be amortized over the next 40-50 years. Extending the life span by 25, 50, 100% would allow this investment to be increased without any increase in capital expenditures. The financial time bombs posed by social security, under-funded pension plans, unrealistic retirement expectations could all be allieviated by just a modest extension in the human life span. we all should be investing in promising life extension projects if for no other reason than the return on investment may be the greater than any other innovation in history.