In the past 30 years, I have visited many countries and regions in the world and noticed that there are huge differences in the age structure of the population and its evolution process between different places. What impresses me most is a presentation I saw about demographic change during my visit to Helios, Germany’s largest private medical care group, in 2016.
In the past 30 years, I have visited many countries and regions in the world and noticed that there are huge differences in the age structure of the population and its evolution process between different places. What impresses me most is a presentation I saw about demographic change during my visit to Helios, Germany’s largest private medical care group, in 2016. A set of pictures depicts the evolution process of the European population age structure: it began as a pyramid and then gradually changed into a column with the same proportion of the population of all ages, and the population no longer increased significantly. This made me feel a lot. Through reverse thinking, I suddenly realized that the columnar age structure of the population is very common in developed societies, and it is almost impossible to return to the pyramid structure.
In fact, looking back in history, mankind was in an equilibrium state of extremely slow population growth for more than 100 thousand years. Only in the past 300 years has the process of industrialization and urbanization been underway. Science and technology have developed rapidly, the economy has continued to prosper, and the population has increased very fast. However, looking ahead, the population surge in the past 300 years was only a very short and special period. The huge momentum of population growth is declining rapidly. In the twenty-first century, the global population is likely to peak, and then human society will enter a new equilibrium state in which the population will no longer grow or even decline slowly for a long time. When the new population equilibrium comes, what will happen in the world?
In the past, people were keen to discuss the difficulties brought by overpopulation, but now there are more discussions about how to face the problems of population aging and population decline. Some people often take the increase in the elderly population as a bad thing and look at the phenomenon caused by population death and the decline in the fertility rate negatively. In fact, we should realize that the pyramid structure of the population is not the normal development of human society, and the deepening aging society is also only a stage of the change in population age structure. The change in the population age structure is essentially the result of the joint action of the two core driving forces of mortality and fertility. Only when we have a full understanding of the basic characteristics of the new population equilibrium in the era of longevity can we gain deeper insights into future economic and social changes.
1.1 In the Era of Longevity, Population Growth and Structure Have Reached a New Equilibrium
The World is Aging Rapidly and the Population Will Peak Ahead of Time
According to the UN World Population Prospects 2019, the average life expectancy of the world population in 2019 reached 72.6 years, an increase of 8.4 years since 1990. Among high-income countries, life expectancy in Japan has reached 84.6 years. China, as an above-average middle-income country, has a life expectancy of 77.3 years. It is estimated that the average life expectancy of the global population is expected to reach 77.1 years in 2050. By then, the proportion of people aged 65 and above will have reached 15.9%. At the same time, the growth rate of the elderly aged 80 and above will exceed that of the young elderly, and the population of those elderly people will reach 426 million by 2050, three times the number in 2019.
The median age of the population1 is similar to the “center of gravity” of the population age structure, through which we can simply see the speed and degree of population aging. In the middle and late twentieth century, the whole world was getting older, but the speed of each country was very different (see Table 1.1). A slight comparison will show that compared with European and American countries, the aged population of East Asian countries is growing faster, and the change in population age structure is more drastic. In 1960, the median age of the UK population reached 35.6 years. In 2020, 60 years later, it only increased slowly by 4.9 years. During the same period, the median age of the population in the US increased by 8.6 years, while in Japan, the number jumped by 23 years, close to half a hundred. In China, the growth of the number was not small either, increasing by 17.1 years.
Different countries’ life expectancies and median age of population at different times
Median age of population
The United Kingdom
The United States
Source The UN World Population Prospects 2019 database, The Statistical Bulletin for China’s Health Care Development in 2019 released by National Health Commission of China, World Bank, Our World in Data database, U.S. Centers for Disease Control and Prevention, and National Bureau of Statistics of China
Note The life expectancy of China’s population in 1960 is the number of 1957 released by the National Bureau of Statistics of China
With population aging, countries and regions, such as Germany, Japan, and Russia, have seen negative population growth. Although the total global population is still increasing, the growth momentum has declined significantly. The fertility rate of an increasing number of countries is beginning to be lower than the replacement level2 of keeping the population unchanged; that is, the average number of children delivered by a woman is less than 2.1. When the number of global births is less than the number of deaths, the world population will stop growing. Since the long-term trend of death rate decline is relatively stable, the global population peak basically depends on the rate of decline in the fertility rate in the future.
Some scholars believe that negative global population growth will come very soon. According to the research of the University of Washington, the global population will reach a peak of 9.7 billion in 2064, and then the negative growth will begin. By the end of the twenty-first century, the global population will fall below 9 billion. The UN's prediction based on the medium fertility rate assumption is relatively optimistic. It is believed that the world population will stop growing when it reaches 10.9 billion in 2100. The difference in population prediction between the two mainly lies in the different expectations of the future fertility rate.
China has always been the most populous country in the world. According to the data of the Seventh National Population Census, China’s total population was 1.41 billion in 2020, which continued to grow. However, the number of births has decreased to 12 million, 2.6 million less than the number forecasted by the National Bureau of Statistics in 2019. According to this estimation, China’s newly born population is likely to fall to approximately 10 million within a few years, which will be almost the same as the deaths in the same period. At that time, China’s population will reach its peak and will not increase afterwards. In the past, many scholars proposed that China’s population would peak between 2025 and 2030. Now, it seems that the peak is likely to be advanced.
Negative population growth will lead to a series of socioeconomic consequences. Darrell Bricker put forward in the book Empty Planet that due to the sharp decline of the population, mankind is likely to face an empty planet in the future. It is not natural resources that will be exhausted, but human beings. Will this almost sci-fi imagination truly become a reality? Fortunately, even if the population starts to decline, halving it will take quite a long time. Mankind is good at learning and adapting. In the foreseeable future, we can learn from the experience of Japan and other pioneering countries in the era of longevity to better meet the challenges brought by changes in population. The fourth chapter of this book will conduct an in-depth analysis of Japan’s society and economy.
Population Age Structure Morphing from Pyramid to Column
Behind the population size and age structure is the change in the death rate and fertility rate. Human society is undergoing a transition from high mortality and high fertility to low mortality and low fertility.3
The phenomenon of population “aging” and “decline” described above is the result of this transition. The “demographic transition theory”, first proposed by the US demographer Warren Thompson in 1929 and later evolved over a long period of time, is the most classic description of this transition.
Under classic population transition theory, the evolution process of the population age structure is divided into four stages (see Fig. 1.1). The first stage is characterized by a high death rate and high birth rate, with the population staying unchanged in size or experiencing extremely slow growth. The second stage shows that the death rate begins to decline, while the birth rate remains high, so the population increases rapidly. In the third stage, while the death rate remains low, the birth rate begins to decline, and population growth slows down. The fourth stage is characterized by a low death rate and low birth rate, and the population size tends to be stable.
Based on the changes in the death rate and birth rate in the above four stages, the historical phases of human development corresponding to each stage can be roughly matched.
The first stage corresponds to the hunting-gathering era and the agricultural society. The death rate of infants and adolescents was high, and the population growth was extremely slow.
The second stage corresponds to the early industrial era, which was characterized by high population growth. The pyramid shape of the population age structure is widely known. The most representative examples are China and India after World War II. While the death rate decreased rapidly, the birth rate remained high, so the population grew rapidly. The total population of the two countries successively exceeded 1 billion.
The third stage corresponds to the middle and late industrial era. At this time, the death rate dropped to a low level, and the birth rate also began to decline rapidly, resulting in a narrowed base of the population pyramid. In fact, the vast majority of countries with a high level of industrialization in the world have already gone through the third stage, while some newly industrialized countries are now in this stage.
The fourth stage is the period of low death rate and low birth rate. At this time, the base of the population age structure narrows faster, changing from a typical pyramid to a column. The population of all age groups tends to be the same. A sign of the columnar transformation of the population age structure is that the proportion of the elderly population catches up with the proportion of the youth population. At present, many mature industrialized countries are in or about to be in the fourth stage, such as the UK and Germany.
We believe that the longevity era is actually an extension of the fourth stage under traditional population transition theory and that there will be a new equilibrium state of population transition in the era. Now, it is difficult to draw a precise conclusion on what the population age structure will be like at that time. Although the trend of the death rate is generally clear, it is difficult to predict the trend of the birth rate, especially the pace of the changes. Due to the continuous extension of human life, the center of the column structure will move upward. If the birth rate continues to be significantly lower than the replacement level for a long time, the total population will decrease, and the base of the column structure will narrow further. Then, the population age structure becomes the shape of an inverted trapezoid.
By comparing the changes in the population age structure in the UK, the US, Japan and China in the past 100 years, we can more directly sense the differences in their population age composition in the past, at present and in the future.
In Europe, where the Industrial Revolution first took place, the death rate and the birth rate were also the first to change. The population transition in the UK from the third stage to the fourth stage began at the eve of the Second World War. In 1950, the bottom of the age structure of the UK population was obviously rectangular. In 2020, the column took shape. By 2050, with the further extension of life expectancy and the continuous increase in the proportion of elderly individuals, the age structure of the population in the UK will be in the shape of a slim column, and the population size will be basically stable (see Fig. 1.2).
The US has a more open immigration policy and a higher birth rate, so its population is slightly younger than that of the UK. At present, the population of the United States is still growing, but the growth rate is declining significantly. According to the results of the 2020 U.S. Census, the U.S. population growth rate dropped to 7.4% between 2010 and 2020, which is second only to the historical low during the 10 years after the Great Depression from 1930 to 1940. By 2050, the columnar shape of the age structure of the U.S. population will also become more pronounced (see Fig. 1.3).
Unlike the UK and the US, which were among the first countries to begin industrialization, Japan has almost completed the demographic transition from the second stage to the fourth stage in a very short time. It can be seen that the age structure of Japan’s population in 1950 was a typical pyramid. After a short baby boom after World War II, its birth rate began to decline sharply. Japan entered a stage of population decline after its population peaked in 2008. In 2020, the age structure of Japan’s population was even worse than a columnar structure. In 2050, the age structure will be an obvious inverted trapezoid (see Fig. 1.4).
After the founding of the People’s Republic of China, against the background of encouraging more births, China has maintained a high birth rate for nearly two decades. In the 1950s and 1960s, China ushered in two waves of baby booms with an average annual number of new births of more than 20 million, and many families had five to six children. In the 1970s, China’s birth rate began to decline rapidly. In 1980, total fertility rate, that is, the average number of children delivered per woman during childbearing age, fell to less than 3. With the introduction of the strict family planning policy in the 1980s, China’s total fertility rate further declined. Nevertheless, from 1981 to 1997, the first two waves of baby boomers entered their reproductive age, which still brought the third peak of new births. After more than two decades, even if the universal two-child policy was introduced in 2015, there were no large-scale baby booms. According to the prediction of the UN, the age structure of China’s population will become a columnar shape in 2050. However, the results of the Seventh National Census show that the number of total new births per woman in China fell to 1.3 in 2020, which was lower than the alarming level of the so-called low fertility trap4 internationally. In the long run, China’s population age structure is likely to be more similar to that of Japan (see Fig. 1.5).
The population age structure’s morphing from pyramid to column will have a profound impact on all aspects of society. In the process of this transition, the huge newborn population at the bottom of the pyramid will gradually become the main force of social production and consumption over time. When these people enter middle age to buy houses, the real estate industry will boom. When these people enter old age, the elderly care and health care industries will usher in huge development opportunities. However, when the waves of population tide recedes and the population age structure becomes a column, the industries that rise with the population tide need to be adjusted, and some industries will even decline.
In the process of population age structure morphing into a column, the most noteworthy is the end of the third stage of population transition. At this time, the birth rate decreased rapidly, resulting in a decline in the proportion of minor dependents. As baby boomers enter the working age, the whole society is in the stage of the most abundant labor force, and the working population accounts for the majority of the total population. The increase in labor supply and the promotion of the savings rate will create unique development opportunities for economic growth from the perspectives of both human resources and capital. In economics, this kind of economic growth is called the demographic dividend5 because the number and proportion of the working age population grow faster than those of other age groups.
China is undoubtedly a global model for making full use of the demographic dividend. In the 1990s, the total dependency ratio of China’s population, that is, the ratio of the elderly and young population who need to be supported to the working age population, fell below 50%. China thus began its demographic dividend period. With the rapid development of urbanization, a large number of laborers in rural areas continued to flow into urban areas, forming a special group of migrant workers. According to the 2020 Migrant Workers Monitoring Survey Report issued by the National Bureau of Statistics, the number of migrant workers in China reached its peak in 2019, approaching 300 million. As China has a tradition of reuniting with family members on New Year’s Eve, this huge group of people would choose to go back home in the run-up to the Spring Festival, forming a Spring Festival transportation that can be called “a rare global population flow”. With the growth of the working population, increasing access to education for all has improved human capital. The improvement of medical treatment and public health conditions has improved the health capital of the labor force, and the enabling environment brought by the reform and opening-up policy has unleashed the demographic dividend. China’s economy has continued to grow at a high speed and has maintained its obvious advantages in the process of globalization. However, this dividend brought by the population size has always been only a temporary phenomenon in the process of population transition. We cannot help but asking, is the demographic dividend temporary? After the huge working age population retires, will the demographic dividend become a demographic liability? In the last section of this chapter, we will continue to discuss this issue.
A Society in Which the Elderly Account for a Quarter
In the era of longevity, the proportion of the elderly population will exceed one quarter of the total population for a long time. According to the data of the United Nations, both developed countries in Europe and the United States, emerging developed countries in Asia such as Japan and South Korea, and developing countries such as China, despite their different population transition paces and stages, the proportion of elderly individuals aged 65 and above will exceed 25% by the middle of the twenty-first century and will remain at that level for a long time (see Fig. 1.6).
The emergence of this high proportion mainly depends on two factors: on the one hand, the decline in the death rate will increase the elderly population; on the other hand, the low birth rate will lead to a decrease in the proportion of young people. A noteworthy phenomenon is that the decline in birth rate is closely related to the increase in the proportion of the elderly population. As American scholar John Weeks pointed out in the classic textbook Population: An Introduction to Concepts and Issues, the decline in death rate will inevitably increase the number of elderly individuals, while the proportion of elderly individuals aged 65 and above will rise significantly only on the premise of the decline in birth rate.
Due to its huge population, China has always been the country with the largest population of the old in the world. However, in the past, the proportion of the old population was not as high as it is now and did not attract much social attention. Today, the number and proportion of China’s elderly population are growing rapidly. The results of the Seventh National Census show that in 2020, China’s population aged 65 and above reached 191 million, accounting for 13.5%, and China soon became an aged society. China Development Report 2020—Population Aging: China’s Development Trend and Policy Options released by the China Development Research Foundation predicted that China’s population aged 65 and above would reach 310 million in 2035, accounting for 22.3%, and 380 million in 2050, accounting for 27.9%. It is worth noting that from the census data, we will usher in the aged society faster than previously predicted.
With the improvement of the overall health condition of the public and the continuous extension of the human life span, society has further divided the traditionally called elderly people. People between 65 and 79 are now commonly referred to as the young elderly, who remain in good physical and mental condition. People aged 80 and above are called the older elderly, and their demand for life care and medical treatment will increase significantly. According to the UN, in 2020, the older elderly in Japan accounted for 32% of the total elderly population, that is, one-third of the elderly population. In the US and the UK, older elderly individuals also account for approximately 25% of the overall elderly population.
At present, the growth of China’s aged population is dominated by the growth of the young elderly, and the growth rate of the older elderly is slightly slower than the overall population aging. However, by approximately 2030, the older elderly will become the fastest growing group of the elderly population. With the generation born in the 1950s and 1960s entering the older elderly group, the older elderly will become increasingly prominent in the future population age structure. According to the China Development Report 2020—Population Aging: China’s Development Trend and Policy Options, in 2010, China’s population aged 80 and above was less than 20 million, but this number reached approximately 30 million in 2020. Moving forward, the growth rate of the older elderly population will be faster. It is expected that by 2033, this number will double to more than 60 million, and its proportion will exceed one-fifth of the elderly population. After that, the proportion of the older elderly will continue to rise rapidly and become the fastest growing group in the whole elderly population. In a society with more than a quarter of the elderly population and a high proportion of the older elderly, the economic fabrics of the whole society need to be adjusted, transformed and rebuilt. Otherwise, the burden of health care, family care and finance will not only overwhelm individuals and families but also make government finance unsustainable. This requires individuals, governments and enterprises to work together to find solutions.
Can Cities Usher in New Prosperity?
Industrialization is the main driving force of urbanization. The outbreak of the Industrial Revolution in the 1760s promoted the flow of population and urbanization. Prosperous large cities and super city groups emerged. Today, more than 80% of people in high-income countries live in cities. In above-average middle-income countries, this proportion is also 50% to 80%. The results of the Seventh National Census show that the urbanization rate of China’s population is accelerating. In 2020, the urbanization rate of permanent residents reached 63.9%, added by more than 14% points to that of 2010. This number is still on the rise. In addition, we have also seen the trend of further concentration of China’s population to large and medium-sized cities, especially to the urban agglomeration in the southeast.
Urban prosperity is not static. With societal development, the progress of industry and the transfer of emerging technologies, the urban population structure will also change. Because the population is concentrated in employment and employment is concentrated with the population, the population structure can be the barometer of urban development. In the middle and late twentieth century, European and American developed countries and Japan completed industrialization one after another and entered the post-industrialization era. The employed population in New York, London and other mega-cities has been reorganized into high-tech economic industries, which has made the economy maintain sustained prosperity and the population structure still relatively young. According to census data from Japan in 2015, the continuous net inflow of the population made the proportion of the working age population aged 15–64 in the Tokyo metropolitan area reach 66%, which was significantly higher than the national average. Accordingly, the proportion of the elderly population in Tokyo was significantly lower than the national average.
However, other former manufacturing centers have fallen behind. From industrial boom to decline, the once glorious metropolises were reduced to the “rust belt”. Pittsburgh in the mid-nineteenth century was known as the Steel City of the US. As long as a young newcomer found a job in a factory there, he could buy a house before getting 30. However, in the 1970s, the economic depression in the US led to the decline of domestic demand, coupled with more international competition from overseas, Pittsburgh’s steel industry began to have overcapacity and the urban economy declined. At its prime time in the 1950s, Pittsburgh’s population once peaked of 680,000. However, in 1990, its population was only 370,000, down by nearly 50%. In particular, young people left the city one after another, resulting in Pittsburgh becoming the second oldest city in the US in the early twenty-first century. Therefore, Pittsburgh has adopted a series of revitalization plans for industrial transformation. Now Pittsburgh has changed from a Steel City to a city characterized by high-tech R&D. Over the past 10 years, the growth rate of Pittsburgh’s elderly population has slowed down significantly, and the rate has been less than half of the average of the US during the same period. In the future, the proportion of Pittsburgh’s elderly population is expected to decrease further.
In fact, China’s three northeastern provinces are facing challenges similar to the “rust belt”. The results of the Seventh National Census show that the permanent resident population of the three northeastern provinces is 98.51 million, a decrease of 11.01 million since 2010. Harbin has also become the only provincial capital city with a population decrease in the past 10 years. The decline in the birth rate and the outflow of the young labor force have exacerbated the population aging in the three northeastern provinces. The proportion of the elderly population has reached 16.4%, higher than the national average.
Are towns where the elderly gather doomed to decline? Of course not. The Villages in Florida, the US, is a town built for active elderly care. What we have seen is evidence of prosperity. Driven by commercial real estate, The Village has established a super large-scale elderly care community in three counties within an area of more than 100 km2, attracting more than 100,000 retirees from all over the country to live and forming a booming community. We will introduce the situation there in detail in Chap. 5.
1.2 Why is Centenary Life Becoming Increasingly Common?
In 2020, COVID-19 ravaged the world, and millions of people lost their lives. The world was clouded by the shadow of the virus. We live in today’s modern society and feel strange to diseases with high infectivity and mortality. This time, however, COVID-19 has made us realize once again the destructive power of infectious diseases and the fragility of life.
In the long history of human beings, in addition to acute infectious diseases, hunger, war and natural disasters have seriously affected human survival. Most people did not make it to adolescence, and the life span was not nearly as long as now. Since the Industrial Revolution, with the rapid development of society and the continuous progress of science and technology, those once life-threatening “monsters” have gradually been under control by human beings. Today, centenary life is no longer so rare.
At the beginning of the Industrial Revolution, people’s life expectancy was less than 30 years old. In the twenty-first century, the life expectancy of the global population has exceeded 70 years. The UN World Population Prospects 2019 report points out that the life expectancy of the global population is expected to reach 77.1 years in 2050. In fact, the growth of life expectancy of the global population is unbalanced. The average life expectancy of the population of middle- and high-income OECD (Organization for Economic Co-operation and Development) countries reached 80.7 years in 2017. In 2020, the years left for people who have just reached the age of 65 in these countries was close to 20 years, that is, their life expectancy would be close to 85 years. In their book The 100-Year Life: Living and Working in an Age of Longevity, Lynda Gratton and Andrew Scott note that millennials in developed countries such as the US, the UK and Japan will have a more than 50% chance of reaching 100 years old. According to the current trend of life expectancy growth, this is by all means possible.
Getting Out of the Malthusian Trap
As observed by Malthus, a British demographer at that time, before the outbreak of the Industrial Revolution, mankind failed to eliminate the constraints of natural resources and the environment, although agricultural civilization promoted the slow growth of the population. Life expectancy did not improve significantly over ten thousand years in history. In the era of hunting and gathering, human beings had no fixed place to live. The harsh living environment makes human mortality extremely high and life expectancy extremely low, with an average of only approximately 20 years old. The population scale was seriously restricted by the external living environment. By the year 10,000 BC, the global population still had not exceeded 4 million.
Approximately 8000 BC, mankind entered the agricultural society and gradually mastered the skills of using natural resources through intensive production. The development of agriculture and animal husbandry has improved the productivity of making food and gradually enhanced the stability of the food supply. At the same time, people’s living conditions, living standards and social environment have been improved accordingly. Human mortality has decreased to some extent, life expectancy has increased slightly, and the population has expanded slowly. By 1750, on the eve of the industrial revolution, the global population had reached 750 million, but the average life expectancy was still hovering at approximately 30 years old.
Compared with the hunting and gathering era, agricultural production has increased the food supply, but famine still occurred frequently, with infectious diseases being more prevalent in densely populated cities and towns. For example, the Black Death, which broke out in the fourteenth century, swept across Europe for more than 200 years and did not dissipate until the mid-seventeenth century. The plague not only caused the loss of almost half of the European population and a high death toll of 75 million but also had a profound impact on the politics, economy and culture of the whole society.
In the late agricultural society, i.e., before the industrial era, the European population grew rapidly and began to overwhelm the carrying capacity of nature. In 1798, Malthus, a British scholar, put forward in his book An Essay on the Principle of Population that the population increased geometrically, while food production increased arithmetically. Once the population grew faster than the food supply capacity, the surplus population would be eliminated by war, famine and plague, which would eventually stagnate the population growth. Malthus observed the dilemma of human development in agricultural society, but from today’s perspective, he did not have insight into the productivity change that industrial civilization would bring about.
The industrial revolution in the mid-eighteenth century helped the population growth break through the carrying capacity limit of agricultural society’s resources and led to an unprecedented explosive growth of the global population (see Fig. 1.7). With the change in productivity, the history of human civilization has also turned a new page. The decline in human mortality in industrial society came from improvements in living standards and nutrition. Industrial civilization liberated and developed productive forces, which greatly strengthened the food supply and its stability. With increased calorie and nutrition intake, the human ability to resist disease risks was improved.
Based on early demographic information, Western scholars found that from 1750 to 1900, the life expectancy of British people increased from 37 to 48 years old, while French life expectancy increased from 26 to 46 years old. Thomas McKeown, a British scholar, noted that the decline in mortality in Britain in the nineteenth century was due to the improvement of economic and social conditions, the most important of which was the improvement of food. Robert W. Fogel, the American Nobel Laureate in economics, has also conducted in-depth research on this phenomenon. He found that the increase in food per capita brought about by the industrial revolution was the most important factor in the significant extension of human life expectancy during this period.
The Dawn of Science Drove Away the Haze of Death
In the nineteenth century, urbanization in Europe and the US accelerated population aggregation. However, along with the prosperity of cities, a series of city problems emerged. As cities witnessed more frequent and intensive outbreaks of infectious diseases, the mortality rate in large cities was once higher than that in rural areas. This phenomenon was called the “urban penalty”. In the mid- and late nineteenth century, with the development of science and technology and the popularization of the concept of public health, people began to gradually master the prevention and control of infectious diseases. John Snow, a British doctor, was one of the pioneers in public health. In the nineteenth century, cholera, which was highly infectious and lethal, occurred many times all over the world. People once had divergent opinions on its causes. It was not until 1854 that John Snow drew a map based on the local cholera epidemic in London and traced the spread of the disease. He found that the source of transmission was located in a public water source polluted by sewage, which scientifically proved that cholera was transmitted through drinking water. When Dr. Snow persuaded the local government to shut down the water source, the cholera epidemic disappeared. Public health does not only entail reducing the mortality rate through medical treatment. In this classic case of cholera, Dr. Snow in fact used statistical methods to determine the cause and then intervened to block the spread of the epidemic.
A study conducted by David Cutler of Harvard University shows that from 1900 to 1940, due to the effective control of infectious diseases transmitted through water and air, the overall mortality rate in the U.S. decreased by 40%, and the life expectancy of Americans extended from 47 to 63 years old. The wide application of water purification, filtration and chlorination systems, which are seemingly simple, has played a vital role. The problem of higher mortality rates in urban areas in the past disappeared during this period.
In agricultural society, people once believed that disease was related to morality or religion. With the advent of the industrial revolution, people began to recognize and approach disease and death in a more scientific and rational way. In the twentieth century, with the popularization of the concept of public health, the field of modern medicine also developed rapidly. On the one hand, diagnosis and surgery have been continuously improved. On the other hand, the research, development and application of drugs have developed rapidly. Before the 1940s, there was nothing humans could do about bacterial infection. In 1928, the British doctor Alexander Fleming found that penicillin had an antibacterial effect. As the Second World War broke out later, a large number of wounded people were in urgent need of anti-infection treatment. Penicillin was thus industrialized and mass produced. This saved a huge amount of lives and drew the curtain of human resistance to infectious diseases.
Bacteria and viruses are the two main categories in the microbial community. In the twentieth century, people have gradually mastered the prevention and treatment of bacterial diseases, and viral infectious diseases have subsequently become the primary diseases threatening human society. To date, effective treatments for many viral diseases are lacking. The 1918 Flu Pandemic (also known as the Spanish Flu) caused 500 million to 1 billion infections and 50 million to 100 million deaths. Today, seasonal flu, seemingly ordinary, still causes 3 million to 5 million severe cases and 290,000 to 650,000 deaths every year. AIDS, which is well known by people, was discovered in the early 1980s. By 2019, there were approximately 1.7 million new HIV infections worldwide and 690,000 deaths from AIDS-related diseases. In 2020, the COVID-19 pandemic broke out worldwide. As of the end of May 2021, 170 million people were infected, and millions had died.
Fortunately, humankind’s ability to cope with infectious diseases has been greatly enhanced from the inability to do anything in the early days. Smallpox has plagued humans for at least 3000 years. In 1796, Edward Jenner, the British doctor and “the father of immunity”, successfully inoculated the smallpox slurry of a female worker suffering from bovine smallpox on a boy; then, in 1980, the World Health Organization announced that smallpox had been completely eliminated. From 1796 to 1980, humankind spent 184 years fighting smallpox. When facing the COVID-19 pandemic in 2020, the vaccine development rate around the globe was unprecedented. Scientists have developed a variety of COVID-19 vaccines in only one year. It is worth noting that China’s experience has also proven that nonmedical approaches such as social mobilization, digitization and Internet technology can also play important or even decisive roles in disease prevention and treatment.
Currently, the relationship between medical and technological development and the decline in mortality has become increasingly closer. Cardiovascular diseases, cancer, AIDS and other diseases are gradually turning from fatal to controllable chronic. From the perspective of the development of global health, the threat of death from infectious diseases is diminishing. In contrast, chronic diseases have become the main threat to human health. The treatment of chronic diseases has begun to play an important role in improving life expectancy. A study conducted by the Maryaline Catillon of Harvard University pointed out that the decline in mortality rate in the U.S. since the 1950s was largely due to the reduction in the mortality rate from heart disease and stroke. From 1950 to 2016, American life expectancy increased by 11 years. More than half of the increase can be attributed to the improvement in the survival rate of people aged 65 years old and above. Cancer, once considered fatal, is gradually becoming chronic. The treatment of tumors has developed from traditional radiotherapy and chemotherapy to targeted therapy. Traditional chemotherapy drugs are similar to nuclear bombs, which remove normal body cells and cancer cells at the same time. Targeted drugs are similar to precision guided missiles, which can identify cancer cells and launch precise attacks to reduce damage to the body. Currently, the research and development of new cancer drugs are also seeking breakthroughs in biological immunotherapy. These kinds of drugs can mobilize the immune system and effectively inhibit cancer cells. It is believed that the day will soon come when people will remove cancer from the list of “incurable” diseases.
Can Human Life Be Extended Indefinitely in the Future?
Life expectancy is closely related to the mortality rates of all age groups. In short, life expectancy is the age that a person born is now expected to live in the future calculated based on the death rate of all age groups. The most important factor affecting life expectancy is the death rate of infants and elderly individuals. The extension of life expectancy is different from that of individual lifespan. There may be centenarians around us occasionally, but this does not represent the overall life expectancy of mankind.
Globally, human life expectancy has increased continuously and significantly since World War II. On the one hand, this is due to the reduction in the mortality rate in developing countries, especially for infants and young children. On the other hand, it is also because of the decline in the mortality rate among elderly individuals. The research published by the Global Burden of Disease (GBD) in the well-known medical journal The Lancet shows that from 1950 to 2017, the global life expectancy climbed from 48.1 to 70.5 years old for men and from 52.9 to 75.6 years old for women. In the past 70 years, for both men and women, life expectancy has increased by more than 3 years every 10 years. Looking from the current trend, human life expectancy will increase by 2–3 years old every 10 years. Another study published in The Lancet by The Institute for Health Metrics and Evaluation (IHME) of the University of Washington predicts that in 2040, the life expectancy of men and women worldwide will be 4.4 years higher than that in 2016. At that time, 59 countries will have a life expectancy of more than 80 years, nearly one-third of the 195 countries and territories covered by the study. When the People’s Republic of China was founded in 1949, the life expectancy of Chinese people was only 35 years old. However, it had reached 77.3 years old by 2019. A study by the University of Washington in the U.S. predicts that the life expectancy of Chinese people will reach 81.9 years old in 2040, which means an increase of approximately 2.5 years old every 10 years in the next 20 years. Perhaps 30–50 years later, the life expectancy of Chinese people can exceed 90 years old, in which case an increasing number of people will live a centenary life.
However, under the general trend of the continuing extension of human life expectancy, the life expectancy growth in some countries and regions has temporarily stagnated or even declined in a certain period of time. The reasons are thought-provoking. We can see that due to the social unrest caused by the collapse of the Soviet Union, from 1989 to 1994, the life expectancy of Russian men decreased from 64.2 to 57.6 years old. This was a decrease of 6.6 years in only five years, which was equivalent to a retrogression of 40 years. In southern Africa, due to the epidemic of AIDS, life expectancy has been hovering at approximately 50 years old. Some countries have been even below 40 years old. In recent years, life expectancy in the U.S. and Britain has also fluctuated or even decreased slightly. The reasons behind these phenomena are social problems such as drug abuse, alcoholism and suicide among young people. The COVID-19 pandemic in 2020 also caused fluctuations in life expectancy. According to Eurostat (The Statistical Office of the European Union), the life expectancy of 22 EU Member States has declined. The US CDC report shows that the life expectancy of Americans in 2020 was 1.5 years lower than that in 2019. Nevertheless, with the progress of science and technology and the development of society, we have every reason to believe that the fluctuations of life expectancy are only small twists and turns in human history, and the life expectancy of human beings will still grow sustainably in the long term.
As for whether there is a ceiling for human life expectancy, no conclusion can be made at present. Currently, scientists’ research on the causes of aging has been divided into molecular biology, such as the wear of telomeres at the top of chromosomes, gene damage caused by genomic instability, environmental factors that change the expression of genes, and harmful protein accumulation. Currently, the scientific community is far from reaching a consensus on the mystery of aging. It is believed that more research findings will renew people’s understanding in the future, and more technological breakthroughs will constantly refresh the limit of life expectancy. From historical experience, the ability of mankind to overcome the threat of death is still improving. The development of knowledge, science and technology will contribute to the continuous extension of human lives.
Extension of Life Expectancy is a Global Development Goal
Human beings have generally eliminated the death threats caused by hunger and acute infectious diseases. In developed countries and some middle- and high-income countries, chronic noncommunicable diseases such as cancer have gradually become the primary cause of death. However, in Sub-Saharan Africa and some other economically underdeveloped areas, infectious diseases such as malaria are still one of the main causes of death. The differences in death rate and life expectancy between countries and regions are still of great concern.
In the 1970s, the American demographer Samuel Preston proposed the famous Preston Curve after studying the relationship between life expectancy and per capita GDP (gross domestic product) in various countries in the world (see Fig. 1.8). It reveals that during the same period, countries with higher levels of economic development generally have longer life expectancy, while poor countries are often accompanied by shorter life expectancy. In countries with a per capita income of less than 10,000 USD, infectious diseases are generally the leading cause of death. In countries with a per capita income of more than 10,000 USD, chronic noncommunicable diseases have replaced communicable diseases as the main cause of death.
Although there is a correlation between income and life expectancy, income is not the only determinant of life expectancy. At the beginning of the founding of the People’s Republic of China, China’s per capita GDP was much lower than that of the developed countries at that time. However, since its founding, the People’s Republic of China not only basically solved the food security problem for the people but also quickly promoted a national health care campaign. A series of primary preventive and health care measures were implemented. China, with a lower GDP per capita, has achieved a much longer life expectancy than other countries at the same economic level, making it an outlier on the Preston curve.
It is not difficult to find from the curve that when per capita GDP is low, its growth is highly correlated with the enhancement of life expectancy. A small increase in GDP per capita leads to a significant extension in life expectancy. This is because hunger and infectious diseases are the main causes of the high death rate in low-income countries. When per capita GDP passes a certain threshold, the neonatal mortality rate decreases greatly, the death of the population mainly comes from elderly individuals, and chronic diseases become the main cause of death. Therefore, economic development has a weaker impact on life expectancy.
After World War II, developed countries continued to provide more assistance to underdeveloped regions such as Sub-Saharan Africa. In addition to economic assistance, a large number of public health organizations and projects have also found their way to these regions to help local residents eliminate all kinds of death threats. In September 2000, at the UN Millennium Summit, world leaders agreed on the “Millennium Development Goals”, which include reducing child mortality, improving maternal health, and combating HIV/AIDS, malaria and other diseases. A study by the University of Maryland in the US shows that from 1960 to 2000, public health infrastructure, immunization, vaccination and special disease prevention and control became important factors driving the decline of mortality in developing countries. Mature medical knowledge and technology have spread in Africa, Latin America, Southeast Asia and other regions, reducing the difference in life expectancy around the world. At present, global health is a hot topic in the international community. After improving its comprehensive national strength and rapidly becoming an important power in the world, China will pay more attention to and invest in this field.
1.3 Unexpected Low Fertility Trap
The death rate has been falling all the way, and human life expectancy has been breaking through the ceiling. Does this mean that the population may increase explosively and bring many social problems? On the eve of the Industrial Revolution, Malthus worried that the population would grow too fast and exceed the carrying capacity of food. In the 1970s, the Club of Rome proposed that mankind would face major crises such as population explosion, food crises, resource consumption and environmental pollution. Obviously, their views were based on the premise of sustained population growth. However, the current challenge facing the world is not too many people but the decline in population caused by the decline in fertility.
Low fertility rates became a global trend in the 1970s. Fertility rates are falling not only in developed countries but also in low-income countries. In demography, the total fertility rate is often used to measure the fertility level, which refers to the average number of children delivered by each woman during her childbearing age (15–49 years old). The UN data show that in the past few decades, the global total fertility rate has decreased from 3.2 in 1990 to 2.5 in 2019. Some countries with ultralow fertility, such as Singapore, have even reached 1.1, which means halving the population of each generation. Based on the medium fertility level assumption, the UN predicts that the global total fertility rate will fall to 2.2 in 2050. However, based on the current trend, the fertility level is likely to be much lower in the future. What is keeping fertility rates so low and even lower? Are all countries in the world experiencing such a decline in fertility? Can this trend be reversed?
Children is Seen as “Liabilities”, not “Assets”
There are many factors affecting the willingness to have children, which can be roughly divided into biological factors and social factors. Generally, biological factors are the influencing factors of the human body itself, including heredity and hormones. Social factors are external factors, including economic development, education, customs and culture. With the deepening of industrialization and urbanization, social factors have increasingly become the key to affecting fertility.
In agricultural society, family is the core unit of production. People are the most important productive resource, and children are the source of labor and livelihood security. The more children there are, the greater the family will thrive. Under the living environment of high mortality in the past, a high fertility rate has become a necessity for maintaining social development. In an agricultural society, having children is an investment for the family. Children aged 5–6 can help the family undertake simple labor production, and they can participate in agricultural production after the age of 10. A thriving population means there is plenty of labor in families, so people have an incentive to have more children, especially boys.
With the advent of industrial society, living conditions, sanitation and medical technology improved, and child mortality significantly reduced, which freed people from being forced to bear children to have an heir. When infant and child mortality rates fall, so does the desire to have more children. More attention has been given to striking a balance between the quantity and quality of child-rearing and to strengthening the education and cultivation of children. As the division of labor in industrial society is gradually refined and the degree of specialization is increasing, the time for children to receive education from birth to work is increasing. The longer the education, the higher the cost of education, the older the age of the workforce, and the greater the financial pressure on the family. On the one hand, the cost of improving the quality of child raising is increasing. On the other hand, the opportunity cost of parents to have children is also increasing–the time spent on child-raising could have been used to make more income or enjoy scarce leisure time. All this has prompted a shift in the economic role of children in the family from “assets” to “liabilities”. Some families find that their investment in their children makes it difficult to have returns, making them less willing to have children.
In modern family fertility decision-making process, women have a louder voice than before. With the significant enhancement of women’s education level and labor participation rate, women’s status in the family is also constantly improving, and the hidden cost of women bearing children is increasing. These change women’s attitudes toward childbearing to some extent and correspondingly delay their marriage and childbearing age. The role of women in bearing children, carrying on offspring and taking care of the family is changing.
In addition, with the rapid spread of cheap and convenient birth control medication and contraceptive tools around the world in the 1960s, effective birth control became easier and more available. The mastery of contraceptive knowledge and the popularization of contraceptive tools have separated sexual behavior from fertility, and the decoupling of sex and fertility has also promoted changes in people’s minds. Therefore, low fertility has become an economic, social and cultural phenomenon and the inevitable result of industrialization and urbanization.
Global Trend of Fertility Decline
In both developed and developing countries, fertility will decline with socioeconomic development, but the length of the declining period varies from country to country. Most developed countries were the first to complete industrialization and urbanization, and their total fertility rates have long since fallen below the replacement level. In the 1960s, economic improvement in many developing countries ushered in industrialization and urbanization, leading to a rapid decline in fertility rates. According to the UN data, low fertility rates have become a global trend. In 2019, half of the world’s population lived in countries and regions with a total fertility rate below 2.1, and the number of births worldwide is expected to decrease year by year after 2045.
Here, we briefly review the changes in fertility rates in the UK, the US, Japan and China (see Fig. 1.9). At the beginning of the nineteenth century, British families were highly fertile, with an average of five to six children. However, as more people moved to cities and worked in factories, low wages at the beginning of jobs and limited living conditions forced them to generally delay marriage and childbearing. By the late nineteenth century, British people’s living conditions improved, child mortality dropped, and upper-class families began to pursue a higher quality of life and actively reduce the number of children. This concept soon spread to the middle and lower classes of society. People recognized the benefits of low fertility. As a result, by the 1930s, Britain’s total fertility rate had fallen below the replacement level. When World War II ended, the UK also had a brief fertility revival, after which its total fertility rate remained roughly at 1.7–1.8. Since 2010, the fertility rate has been falling again. The number was below 1.7 in 2019.
In the US, similar to the UK, fertility fell as industrial civilization infiltrated the south after the end of the civil war in the nineteenth century, reaching near replacement levels in the 1930s. The total fertility rate soared to a high of 3.6 in 1957 after the 18-year baby boom that followed the end of World War II. This wave of high fertility rates in the US lasted mostly until the mid-to-late 1960s, when it began to decline. In 2020, the total fertility rate in the US fell to 1.63. Although the overall fertility level of the US is slightly higher than that of most European countries, the fertility level of different groups in the US actually varies greatly. The relatively high fertility level of the US is mainly due to the high fertility rate of new immigrants and ethnic minorities, as well as the increase in out-of-wedlock births.
Unlike developed countries such as the UK and the US, Japan experienced a brief post World War II baby boom and a rapid decline in fertility. Its total fertility rate fell from 4.5 in 1947 to 2.0 in 1957 and had fallen to a low level of less than 1.5 by the early 1990s. According to the latest data from Japan’s Ministry of Health, Labor and Welfare (similar to a combination of China’s Ministry of Human Resources and Social Security and the National Health Commission), Japan’s total fertility rate was 1.34 in 2020. Japan has been struggling for nearly three decades, but it is still unable to get itself out of the low fertility trap.
China has also experienced a rapid shift in fertility over the past half century. From 1950 to 1970, China’s fertility rate remained high, and it was common to have five or six children. In the early 1970s, the Chinese government introduced a policy of “later and fewer” births. Although this only advocated rather than forced reduction of births, the concept of families having fewer children was established, so the fertility rate began to decline rapidly from then on. Before the introduction of a relatively strict family planning policy in the 1980s, China’s total fertility rate fell below 3. In the 1990s, the total fertility rate fell further below the replacement level. In the twenty-first century, there are endless debates on China’s family planning policy and fertility rate data from academia and society, and the voice of liberalizing fertility is becoming even louder. In response, since 2011, China has introduced polices such as “couple grew up both as a single child can have the second child” and “couple grew up either as a single child can have the second child”. In 2015, China implemented the “universal two-child policy”. Data from the Seventh National Census show a significant increase in the second-childbirth rate. The proportion of second-child births rose from approximately 30% in 2013 to approximately 50% in 2017. However, the census also shows that China’s total fertility rate in 2020 was already at a low level of 1.3. The universal two-child policy has been implemented for five years. Although the number of births increased in 2016 and 2017, it still failed to reverse the downward trend of China’s fertility rate. Therefore, the government has announced further optimization of the family planning policy and implementation of the universal three-child policy and supporting measures. However, the family planning policy is no longer the leading factor affecting China’s fertility level. In fact, social, economic, cultural and other factors are increasingly becoming the key factors influencing China’s fertility trend.
Fertility Fluctuations and Demographic Inertia
For a variety of reasons, fertility is not nearly as smooth as the downward progression of death rates. Some catastrophic events lead to a short-term drop in births and a decrease in people’s willingness to have children, usually followed by a temporary rebound. During World War II, for example, fertility rates fell sharply, and the number of births plunged. After World War II, as the economy recovered and life returned to normal, the short-term fertility rate rose significantly as people had compensatory child births, and the related countries experienced a baby boom to varying degrees. As mentioned earlier, Japan’s post-World War II baby boom lasted less than a decade, compared with 18 years in the US. Even as fertility rates fall, baby boomers were likely to have more children than any other age group because of their large population scale. So we’re going to see the baby boomer wave in the demographics.
China has experienced three baby booms since the founding of the People’s Republic of China, according to a report by the National Bureau of Statistics. From 1950 to 1958, China saw its first population baby boom, with an average annual birth of 21 million and an average total fertility rate of 5.3, during which 206 million people were born. From 1962 to 1975, China welcomed the second baby boom. In 1963, the births peaked at 30 million. During this period, a total of 364 million people were born. From 1981 to 1997, China had the third baby boom, during which 375 million people were born. In fact, in the 1990s, China’s total fertility rate had fallen below the replacement level. The baby boom of the post-1980s generation was not because each family had more children but because those born in the first two baby booms were in their childbearing years so that their total population made a contribution to the third baby boom.
Demographically, “demographic inertia” is used to describe the phenomenon in which fertility is below the replacement level, but births still exceed deaths, and the population continues to grow. Demographic inertia causes fluctuations in births, which usually take two or three generations to return to normal. The generations after the so-called baby boom, because they have higher proportions in the age structure of the whole society, will have more characteristic demands, more influences on the whole society, and bring different business opportunities. This will create a more unique generation.
As shown in Fig. 1.10, those born in the first wave of China’s high population growth in the 1950s reached 60 years old approximately 2021. In general, their consumption attitudes and demands for elderly care are relatively conservative, mainly focusing on basic living care and medical needs. The second baby-boom born generation is in their 50s, and their consumption capability and influence are just beginning to be unleashed. It may be hard to say exactly when square dancing started, but there is no doubt that the post-50s and post-60s are the main force driving this wave of square dancing. Today, we can see that social platforms, e-commerce shopping services, universities for elderly individuals, information we-media and other online and offline specialized services for the elderly are constantly emerging. The impact of China’s baby boom generation on the elderly care market is beginning to take shape. The post-1980s and post-1990s generation is becoming the main force of social spending, and China’s consumption market targets its demand for housing, cars and other durable consumer goods. These young people, at the same time, have begun to prepare for their future elderly life.
In 2020, the COVID-19 pandemic raged around the world, sparking heated debate about its impact on fertility. At the beginning of the outbreak, some people suggested that home isolation would boost fertility rates. However, the fertility data released by countries in 2021 once again prove that unemployment, poverty and anxiety will lead to a significant decrease in short-term fertility levels of the whole society in the face of major disasters. According to the results of the Seventh National Census, 12 million people were born in China in 2020, 2.6 million fewer than the 14.65 million reported by the National Bureau of Statistics in 2019. It is important to note that the number of people born in 2020 will be affected only in a very limited way, and the impact of COVID-19 may not be fully felt until 2021. The current decline in the number of births in China is mainly due to the continuing decline in the number of women of childbearing age and the declining willingness of the post-1980s and post-1990s generations to have children. The factors influencing fertility willingness are complex, and it is difficult to say whether the current low fertility rate will fluctuate later.
Can Low Fertility Rate Be Reversed?
Of course, the downward trend in fertility is not set in stone. The researchers observed that total fertility rates in several Eurasian countries that fell into the low fertility trap in the 1980s and 1990s slowly rebounded to 1.4 or more in the 2000s. However, it is difficult to say that there has been a fundamental reversal of fertility levels in these countries, as we have seen the total fertility rate decline again in the last five years. This makes it even harder to return above the replacement level.
A low fertility rate is an extremely complex issue, and almost all developed countries around the world are taking incentives to try to raise fertility levels. France, Germany, Japan and other countries implement the cash subsidy policy, providing cash subsidies directly to families who have children to reduce the pressure of raising children by increasing family income. The US, Spain and other countries provide tax incentives, cutting the income tax appropriately of the family that has children to increase after-tax income to cover the basic living expenses of child raising and other expenses. Russia, Sweden, Norway and other countries bank on the maternity leave system, extending the length of paid maternity leave for mothers and paternity leave for fathers, in an effort to spur fertility by increasing the benefits of maternity leave.
However, no matter what measures are taken, statistics find they show little effect. In fact, a low fertility rate is the inevitable trend of social and economic development to a certain stage. Scholars in Europe have also proposed a “second demographic transition theory” to explain why fertility continues to be below the replacement level and to predict the future overall demographic structure of society, as well as changes in individual and family behavior, after the traditional demographic transition is complete. The first demographic transition is a change in fertility behavior, with fewer children. The second demographic transition is a change in people’s expectations of marriage. The main reason for the second demographic transition is the change in people’s minds, which includes the recognition of the social role of women, the change in the concept of sex and family, and the emphasis on self-realization. This change has led to great shifts in the family field. The main examples are the delay in the age of first marriage, the declining rate of people getting married, the rise in cohabitation rates and the rise in divorce rates. These behavioral changes are rooted in the context of social change and are difficult to be affected by external policies, which will bring great pressure and challenges to human society in the following days.
In recent years, although China has introduced the universal two-child policy, its fertility rate has not recovered due to the change in the fertility desire and the increasing hidden cost of raising kids. Instead, it has slipped to the low fertility trap. Currently, with the influence of traditional marriage and childbearing culture, people are still basically keeping the state of married universally. Keeping married universally means that there is still a foundation for birth-giving. However, the social environment and the concept of marriage and family are changing, making it increasingly difficult for the fertility rate to rise above 1.5.
1.4 Are We Ready for the Era of Longevity?
Human society is welcoming the era of longevity. In the near future, the elderly will make up more than a quarter of their population in an increasing number of countries as the population age structure gradually transforms into a column shape. The past population dividend is declining, and the economic consequences brought by population aging and negative population growth are worrisome. In the face of the ongoing changes in the economy and society, how should we deal with them? What actions should individuals, governments and enterprises, as different social participants, take to adapt to the era of longevity?
Five Characteristics of the Era of Longevity
The era of longevity will be a great change in human history. In the past nearly 300 years, the population has experienced explosive growth. However, this is just a short period in the history of human development. The longevity era will be a population norm and a new equilibrium in the future of human society. We believe that the era of longevity has five characteristics: low mortality rate, sustained extension in life expectancy, low fertility rate, columnar age structure, and the proportion of the elderly aged 65 and above accounting for more than a quarter for a long time.
First, the falling death rate has led to extended life expectancy. With the continuous progress of human knowledge and technology, people are constantly overcoming the threat of death from disease and aging. In the future, people’s life expectancy will continue to extend at the rate of two to three years every decade, and centenary life will become increasingly common. Second, in the demographic transition period, the rapid decline in the fertility rate is the dominant factor in the population age structure transforming from pyramid to column. Low fertility rate is the result of industrialization and urbanization and has become an almost irreversible reality as women’s social roles change and the cost of raising children continues to rise. Long-term low fertility rate leads to a decrease in births, which gradually narrows the base of the population age structure and accelerates the transformation of the population pyramid to the column. Coupled with the extension of life expectancy and the expansion of the top of the population age structure, the proportion of people aged 65 and above has significantly increased and will exceed one quarter of the total population. Mankind will thus come to the era of longevity.
The era of longevity means that human beings have to re-examine ourselves. How will we come to this new era? First, longer life may not mean a longer healthy life, which I have summed up as “in the age of longevity, everyone will live with disease”. In this case, the longer you live, the more you need elderly care and medical support. This will change the industrial structure, as well as the corresponding financing arrangements. Of course, living with illness does not mean that old age is a sick life and has to be confined to a sickbed. We believe that the goal of the development of the health industry is to minimize the loss from disease and even prevent people from getting sick. Perhaps when we enter the era of longevity with the state of “living with disease”, disease is just a biological label that coexists with us. Second, the era of longevity requires a fundamental change in the way we view life. In the agricultural era, the average life expectancy was only 30 years old. “A man seldom lives to be seventy years old”. At that time, twenty years old is young, forty years old is middle age, and sixty years old is old age. In the era of longevity, forty is youth, sixty is middle age, and eighty is old age. This allows us to replan our lives, and the institutional arrangements of the whole society have to adapt to this individual microscopic change. From this point of view, when we look at the future world next time, the era of longevity may not be feared, even something to be looked forward to.
After the Demographic Dividend Disappears
The relationship between population and economic development is one of the constant themes of concern for human society. The changes in population size and structure play a vital role in economic development. Taikang has always believed that the determining factor of economic development is “macro economic environment for short-term, structure for mid-term and population for long term”. Population is the most fundamental driving force of economic and social development. The change in population age structure in the era of longevity will certainly have a profound and far-reaching impact on the future.
The relationship between population and economy has been an important issue in economic studies for quite a long time. Over the centuries, economists have conducted extensive and in-depth studies on this issue. Malthus was the first scholar to have conducted a comprehensive and systematic study on this matter. In the 1930s, when major developed countries in the West were experiencing a severe economic crisis, Keynes analyzed the causes of economic crises and corresponding countermeasures from the perspective of population and put forward the famous “Stagnation Theory”. He believed that population growth is the stimulus and driving force of economic development, and the decline in population growth is the main reason for the lack of demand and the decline in investment.
Early economists spent their attention mainly on the impact that population size has on the economy, while post World War II economists focused more on the impact that population structure has on the economy. Among their studies, those on Demographic Dividend were the most in depth. Demographic Dividend refers to a boost to the economy generated by a demographic transition when the number and share of the working-age population grow faster than those of other age groups and the total dependency ratio declines. The Demographic Dividend period is usually considered to be the period when the total Dependency Ratio of the population is below 50%. Traditionally, the demographic dividend is mainly reflected as a quantity-based demographic dividend, also known as the first demographic dividend.
In fact, China’s rapid development over the past 40 years is the most vivid example of a demographic dividend. In the early 1990s, China’s total dependency ratio dropped below 50% and entered its demographic dividend period, leading to an astonishing leap in its economic development, thus becoming the world’s second largest economy in 2010. In its essence, the rise of China is the rise of human resources. China has abundant human resources—in fact it has the largest labor force in the world. In the past, 300 million migrant workers were shuttling between cities and villages, providing abundant human capital for China’s rapid economic development. It is not an exaggeration to say that China’s modernization was shouldered up by these 300 million migrant workers.
Today, China’s total dependency ratio is on a path of rapid recovery (see Fig. 1.11). According to China’s Seventh National Demographic Census, China’s total dependency ratio in 2020 rose to 45.9% and may possibly climb up further over 50% in 2030. Although China still has a large working-age population, its quantity-based demographic dividend is fading quickly. There was a time when labor might have been the last thing China lacked. Today, however, in Southeast coastal cities where manufacturing is highly developed, we would hardly see tens of thousands of migrant workers flocking to factories as before. Countless factories are facing dire labor shortages and recruitment difficulties.
While the Demographic Dividend brings rapid economic development, it also leaves behind huge challenges for the future: when the working-age population that created the Demographic Dividend gradually ages, the proportion of the aged population will increase rapidly. The steep rise in the Old-Age Dependency Ratio puts great pressure on society, leading to problems such as an insufficient labor force, a declining savings rate, and a depleted motivation for social innovation.
The predicament Japan is currently facing is also partly caused by its fading Demographic Dividend. Japan experienced a brief period of Demographic Dividend in the 1970s and 1980s, but its total dependency ratio began to rise rapidly in the early 1990s. As the proportion of Japan’s aged population grew, the demands for medical treatment, health care and pension continued to expand, and the society’s dependency pressure increased daily. Within Japanese households, the working generation not only had to take care of their elders but also had to raise their children. It seemed as if the whole society was paying back what they had gained from the Demographic Dividend in the past.
With the Demographic Dividend fading off, will China’s economic growth stagnate in the future? Will China face difficulty in sustainable development? As the quantity-based demographic dividend wears off, the improvement of population quality will stimulate the formation of a second demographic dividend, namely, the quality-based demographic dividend, which will drive the economy to take off again. Theories on the Second Demographic Dividend propose that, facing a prolonged life expectancy and a lowering pension replacement rate, people will cope with various challenges brought by the aging of the population by rationally optimizing their personal consumption and saving behaviors and adjusting their human capital investment and labor supply. The increase in personal savings and investment in education will increase the aggregate social savings and improve human capital, which will create a boost in economic development. While the First Demographic Dividend only emphasizes the impact that population structure has on economic growth, the Second Demographic Dividend focuses on the quality of population structure. As population structure shifts, economic growth will become increasingly dependent on the resources which could be altered and nurtured.
The most important approach to the second demographic dividend is improving the quality of human capital through education, which can effectively counter the negative impact of a shrinking labor force. The return on education investment is highly lucrative, whether from the perspective of personal income or the macroeconomy. According to China’s Seventh National Population Census, the average length of education for people aged 15 and above increased from 9.08 years in 2010 to 9.91 years in 2020, and the number of people with a college degree reached 220 million, which is 100 million more than that of 2010. The significant improvement in the quality of the population and the continuous improvement of human capital will drive China to transition rapidly from the quantity-based demographic dividend to a quality-based demographic dividend. It can be predicted that automation and artificial intelligence will bring about brand-new production models in the future, and the quality of labor required then will be different from the past: a lot of simple and repetitive work will gradually be completed by machines instead of people, and jobs that require human talents, creativity and social skills will increase. At the same time, many new professions are being created in society, such as Data Mining Experts, Algorithm Engineers, Artificial Intelligence Trainers, and Health and Wealth Planners. An increasingly higher education level of labor will be required in the transition from the quantity-based demographic dividend to the quality-based demographic dividend, and people will need to acquire new skills continuously to adapt to the changes at work.
With the arrival of the “Silver Hair Wave” in the Era of Longevity, over a quarter of the population will be 65 years old and above. Will the Demographic Dividend be sustained in the Era of Longevity? Until now, many still believe that population aging equals feebleness, negativity and passivity. They regard senior citizens as mere social consumers and dependents who can hardly create any value. However, neither the First nor the Second Demographic Dividend explored the true potential of senior citizens, thus failing to sustain themselves. We believe that in the Era of Longevity, senior citizens’ role in the society will change from the traditionally believed “consumers” to longevity economy “producers”, and the value recreation of senior citizens will bring a third demographic dividend. Taikang has been exploring and experimenting with the establishment of a longevity economy in our senior communities to stimulate the value recreation of senior citizens, the analysis of which will be the focus of the fifth chapter of this book.
Partita in the Era of Longevity: Health and Wealth
Living a good life is an eternal ideal of human beings. As life expectancy increases, people are beginning to pay attention to whether their health and wealth can support a quality long life. How can people enjoy a good life in the Era of Longevity? That is a question that individuals, governments and enterprises are all thinking about. We believe that the Era of Longevity is also the Era of Health and Wealth. It will certainly transform our economy and society, and most definitely inspire brand new solutions.
In the Era of longevity, an increasing number of people will experience a life of over one hundred years. Living with chronic diseases is almost inevitable for everyone, and that will bring strong demands of medicine and health, ushering in the Era of Health. International experience shows that as the proportion of the elderly population continues to grow, expenditures on health care and elderly care will increase, which will bring great challenges to the sustainability of relevant resources. It is well known that the burden of medical expenditure is closely related to the aging of the population. According to investigations by the Kaiser Family Foundation, in the 2016 US, people aged 65 and over accounted for 16% of the US population, yet their annual medical expenditure per capita exceeded 11,000 USD, and they were responsible for 36% of the country’s annual total medical expenditure. US people aged between 19 and 34 years old accounted for 22% of the country’s population, their annual medical expenditure per capita was approximately 2,500 USD, and they were responsible for 11% of the country’s annual total medical expenditure. The average medical spending of people aged 65 and above was more than four times that of people aged approximately 30. People aged 55 and over accounted for 29% of the US population but were responsible for 56% of the country’s medical expenditure. Through calculations, we also found that, the proportion of a country’s total health expenditure out of its GDP is closely related to the proportion of its aged population. Taking OECD countries as an example, for each percentage-point increase in the proportion of the population aged 65 and older, we see a 0.34%-point increase in the proportion of the country’s total healthcare spending out of its GDP (see Fig. 1.12).
The era of longevity has delivered a tremendous financing demand for pension and medical care, calling for the arrival of the era of wealth. In the traditional pension scheme, the working generation pays contribution to the pension pool, from where the pension benefits of the retired elderly are withdrawn in the same period of time. When working people age and retire, they will be supported by the pension plan, while the forthcoming working generation will contribute to the pool. That is how the classic pension system formed in an industrial society has been operating generation after generation. The system may appear perfect, but as the old-age population grows larger, so does the consumption of pension benefits, and the pension fund pool will need more contribution from the working generation. The traditional pension scheme may still work well if a relatively high fertility rate could be maintained. However, when the fertility rate falls and the resources created by the young generation will not be sufficient to support the elder generation, the pension replacement rate will continue to decrease and put a heavy burden on the entire society. In the Era of Longevity, the population age structure tends to grow columnar, with which the pension replacement rate will also decrease. To cope with pension fund shortages in the future, individuals, families and countries all need to pay more attention to wealth reservation.
Unlike pensions, health risks, such as illness and loss of capacity, are not evenly distributed among the population. For individuals, it will be difficult to cope with such risks effectively only by personal savings. Therefore, establishing a risk-sharing mechanism at the social level has become necessary to solve the problem of medical funding. Data collected from different countries show that medical costs per capita generally increase significantly faster than GDP per capita. As the working-age population shrinks and the old-age population grows, rapidly rising healthcare expenditures will bring by enormous pressure on governments around the world. Funding for healthcare spending is a global challenge: it requires complex social and commercial insurance mechanisms to strike a balance between cost, accessibility and service quality.
Compared with developed countries, China will face even more challenges. China has a large population base, but its fertility rate is declining rapidly. As a result, China’s population aging has been accelerating continuously. China’s current pension system and medical insurance system are struggling to meet the needs brought by the transforming age structure of its population. Despite the rapid increase in life expectancy, China’s per capita income and savings are still far behind those of developed countries in similar development stages. In 2020, China’s population aged 65 and above accounted for 13.5% of its total population, and its per capita GDP was 10,500 US dollars, while Japan and South Korea’s per capita GDP exceeded 30,000 US dollars at the same aging level.
The era of longevity is not merely a simple demographic phenomenon but also a complex socioeconomic phenomenon. In the face of the profound changes that are about to take place throughout society, individuals, governments and businesses all need to respond actively and take collaborative actions to reap the benefits of the Era of Longevity. When the time comes, enterprises, as productive organizations, should take the initiative to become solution providers for one another and pioneers to lead the transition from “passively accepting realities” to “actively solving problems”. Taikang Insurance Group, which I founded and have been operating, is a practitioner of the Era of Longevity theory. We have explored and developed a complete package of enterprise solutions. Its essence is the combination of virtual insurance payments and real health and social care services. Taikang created portfolios of products and services covering the full life cycle, to better accommodate people’s needs for longevity, health and wealth in the Era of Longevity. By providing a whole set of ideas starting from financing to services for commercial institutions, the Taikang plan led the reform and innovation of the life insurance industry in not only China but also the world and provided a Chinese featured example of how human beings should cope with the Era of Longevity.
I often say that running a business is like writing an article. They both require a deep understanding of things, and the design of layouts and structures should be based on such understanding. The later chapters of this book are my further interpretation of the Era of Longevity. The Era of Longevity will definitely also be the Era of Health and Wealth, and it will surely deliver a longevity economy. As a social member, Taikang’s corporate plan will interact with the individual and government plans in efforts to build a beautiful longevity society together.
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The replacement level is the level at which women in a given country or region have exactly the same number of children as the number of their spouses and themselves, usually defined as 2.1 children per woman, taking into account causes such as newborn deaths. Below the replacement level, the population decreases. Above the replacement level, the population increases.
The death rate here is the crude death rate, which is the average number of deaths per 1000 people in a given period of time (usually within a year) in a country or region. The birth rate is the crude birth rate, which is the average number of births per thousand people in a given period of time (usually within a year) in a country or region.
The low fertility trap was first proposed in 2005 by Wolfgang Lutz, an Austrian academic, and others, and has since been widely used. The core idea is that once a country or region's total fertility rate falls below 1.5, it becomes very difficult to rebound above it.