Longevity Economy 2 Longevity as a financial asset

There is no gainsaying the fact that we live in the age of disruptive demographics, as propounded by Joseph Coughlin, from MIT’s Age Lab. And disruption is an apt word inasmuch as many paradigms – if not all – related to ageing and how the world population has been evolving are being changed or even exploded.

As the Global Age Watch Index chart below demonstrates, ageing is a worldwide phenomenon, the fruit of the increase in life expectancy and which impact on society is compounded by generally poor birthrates.

This global phenomenon turns longevity into a key sustainability factor for people and whole societies and, thus, economies. And this makes longevity, by implication, into a financial asset that must be properly measured, quantified and valued – and this is at the very root of the Longevity Economy.  

According to the Longevity Industry Landscape Overview 2019 report (Ageing Analytics Agency), the Longevity Economy can be worth 17 trillion US Dollars- should it continue to be central to the growth strategies of countries which adopted a national development strategy – and is projected to be worth 27 trillion US Dollars in 2026: a “mere” 20% of the world’s GDP.  

The Longevity Economy already is particularly important for industries such as health, technology, robotics (spanning all others), food and tourism.

But others like banking and finance will undergo a veritable revolution, owing to the need to no longer market to people according to their age but, rather, on how well their age longer and their respective life stages.

Longevity Industry Landscape Overview 2019, p. 10.

And industry change will not stop at banking and finance. Real estate and construction will also be deeply affected by private investments in adapting current family homes for the ever more important “Ageing in Place” concept, and levels of investment in senior and inter-generation housing concepts have been increasing. 

But let’s return to longevity itself.

 Further proof of its continuously growing importance as an asset lies in the development of metrics to assess people’s capability to manage their own longevity in a sustainable way , in the same way as metrics such as the Active Age Index, which measures the capability of countries to promote sustainable ageing.

It is important to bear in mind that the first impact from the previously mentioned disruptive demographics was negative, insofar as it brought about the perception that bad management of longevity leads – due to a number of factors – to an overburdening of national health systems and government pension schemes, due to a surfeit of people in the “non-productive” life stage by comparison with those in employment. 

Thus, the sustainability of economies is inextricably linked to the need to give people the means to have a healthy and productive ageing - this being the only way to allow them to contribute to the economy of their countries, something that they want and will be more and more needed.

Longevity is a very complex subject that could not be covered in just one article, but I cannot fail to mention the case of Japan, a country which, more than just juggle, has to make the most of two megatrends: technological development and population ageing.

The concept of a 5.0 society and its harnessing as part of a national socio-economic development strategy for Japan is grounded on the impact of technological development (4.0) plus the impact of population ageing. So factors which could endanger the sustainability of its society were converted into a growth avenue based on the U.N.’s Sustainable Development Objectives. 

This is how Japan turned longevity into a critical growth factor. And countries which preceded Japan in taking a serious look at longevity, such as the Republic of Ireland – considered, in 2019, the first “Age Friendly” country in the world, according to the World Health Organisation -, Australia, the Scandinavian countries and the UK did the same. 

As for Portugal, a strategy for healthy and active ageing is already in place, but it is nowhere near enough what needs to be done. After all, a country which is amongst the oldest in the world and with its geo-economic potential should already have had in place a strategy for the development of the Longevity Economy.

Ana Jo?o Sepulveda

40+ Lab Managing Partner