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Preparing for the Challenges of Population Aging in Asia: Strengthening the Scientific Basis of Policy Development IV http://www.nap.edu/catalog/12977.html What is iMPortant to KnoW W ith their populations set to age rapidly over the next few decades, asian govern- ments will need accurate information in order to develop appropriate policy responses. high-quality social and behavioral science can be an indispensable tool to better understand prevailing social conditions and key aspects of the well-being of older populations such as family roles and responsibilities, social and economic conditions, and health status. traditionally, the family has been the most important source of support for older adults in asia, with children expected to assume primary responsibility for taking care of parents. But family roles are changing so that it is unclear how much support older people can expect their children and other family members to provide in the future. information about the changing roles and responsibilities of the family will be crucial in discovering which needs of older adults may go unmet. to understand how well older people will be able to take care of their own needs, it is also important to know about their economic circum- stances, including their labor force participation, earnings, and level of savings. how many older people are working? how much have they saved? and if they have pensions, what sort of income can they expect to receive? good health is another essential determinant of quality of life. therefore it is important to improve our understanding of the deter- minants of health and well-being at older ages. typically, there is a close correlation between wealth and health. health usually improves with income throughout the income distribution, although the reasons behind this relation- ship are still not well understood. on the one hand, income and wealth can secure better health. at the same time, good health may have a positive effect on income, particularly if people in good health are able to work longer. in reality, the relative importance of each of these mechanisms is almost certain to be different in different countries as well as different for different causes of illness, phases of the life-cycle, and points in time. these categories of knowledge are by no means exhaustive, but rather illustrate what would be useful to know to prepare for an aging society. ChANgINg RoleS ANd ReSPoNSIBIlITIeS of The fAMIly as just noted, the centuries-long tradition in asian societies has been for children to take care of their elderly parents. today, however, demographic shifts are straining traditional roles and 14 PreParing for the Challenges of PoPulation aging in asia Copyright © National Academy of Sciences. All rights reserved.

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Preparing for the Challenges of Population Aging in Asia: Strengthening the Scientific Basis of Policy Development http://www.nap.edu/catalog/12977.html responsibilities: parents are having fewer children while also living longer lives. at the same time, increasing mobility is producing families whose members live hundreds or thousands of miles apart. More generally, children are more educated and more independent than in the past. understanding these changes can provide useful insights into public policies relat- ing to housing, financial transfers, the giving of physical care, and other aspects of daily life and will be vital to determining the most effective responses to the aging of the population. Most older people in asia still depend on assistance from their children—generally in the form of money and material goods, time, physical care, and the provision of living space—for at least part of their well-being. in india, for example, more than three-quar- ters of the elderly live with their children.7 in a survey of households in new Delhi, more than two-thirds of the elderly reported that they were completely dependent on their families, with no source of independent income to fall back on.8 in indonesia, more than half of the older population receives finan- cial transfers from children who do not live with them.9 and although the proportion of men and women in Japan aged 60 and older who mentioned children as a source of income fell from 30 percent in 1981 to 15 percent in 1996,10 about 65 percent of Japanese aged 65 and older still live with their adult children—a rate higher than in any other industrialized country.11 these modes of support face threats from several trends. reductions in the number of children are leaving parents with fewer sources of assistance. Women, who have traditionally been the predomi- nant caregivers, are entering the workforce in increasing numbers, making it difficult for them to provide traditional levels of support. and increasing urbanization and economic development is drawing children from the countryside to the cities, with two consequences: (1) there is less space for multigenerational living arrangements and (2) there is greater physical separation between elderly parents and adult children. (see figure 5 for data on living arrangements in thailand, which also has a rapidly aging population.) rapid increases in life expectancy also mean that adult chil- dren will be required to provide support and care for elderly parents for longer and longer periods of time; indeed, there will be an increasing number of family caregivers—more often than not women—who reach retirement age while still looking after elderly and often ailing parents. Yet some of the changes may have beneficial implications. Better jobs will provide children with more resources to offer their parents, and some decisions by younger family members to migrate to cities (and even move abroad) may be part of a family economic strategy and motivated in part by the needs of older parents in rural areas. Declining fertility rates also mean that parents will have 1 PreParing for the Challenges of PoPulation aging in asia Copyright © National Academy of Sciences. All rights reserved.

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Preparing for the Challenges of Population Aging in Asia: Strengthening the Scientific Basis of Policy Development http://www.nap.edu/catalog/12977.html fIgURe : PeRCeNTAge of PeoPle Aged 0 ANd oldeR IN ThAIlANd Who lIVe AloNe oR lIVe oNly WITh A SPoUSe, 1-00 18% % live alone 16% % live only with s pouse 14% 12% 10% 8% 6% 4% 2% 0% 1986 1994 2002 2007 sourCe: adapted from Knodel and Chayovan (2008, figure 5-3). Population Ageing and the Well-being of Older Persons in Thailand. Population studies Center research report 08-659. ann arbor: university of Michigan. fewer children to support, potentially leaving them with more resources to devote to their own parents. and as older people live longer and healthier lives, the levels of child care provided by grandparents to grandchildren may also increase, making it easier for mothers of young children to enter or return to the workforce. Box 2 lists some illustrative research questions that arise from the changing roles and responsibili- ties of the family. Box 2: IllustratIve research QuestIons on the changIng roles and responsIbIlItIes of the famIly • What are the living arrangements of the older population? How do these vary by gender? • How much do older people rely on family members for social and economic support? • How are familial expectations and obligations changing over time? • What do we know about the migration of family members and how it affects the well-being of the older population? 1 PreParing for the Challenges of PoPulation aging in asia Copyright © National Academy of Sciences. All rights reserved.

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Preparing for the Challenges of Population Aging in Asia: Strengthening the Scientific Basis of Policy Development http://www.nap.edu/catalog/12977.html lABoR foRCe PARTICIPATIoN, INCoMe, ANd SAVINgS When older adults stop working, they have to rely on support other than wages or salary income; changes in those types of sup- port can in turn affect how long older adults continue working. to understand how well the older population will be able to take care of its own needs (especially in light of the changing roles and responsibilities of families), it is important to have a clear picture of both their labor force participation and their resources, such as savings, wealth, and pensions. this information would allow policy makers to better ascertain the needs of vulnerable populations, design pension and other social protection programs, and develop appropriate labor market policies. in many asian countries, older people have few retirement resources outside of their families and do not have access to formal safety nets. furthermore, as rapid economic changes make their work- related skills obsolete, many may not even have the option to continue working. Poverty rates among the older population in Japan are relatively high,12 and in india high rates of inflation in the consumer goods sector have resulted in negative returns on old age savings for many people.13 in indonesia, support from children may not substitute for elderly parents’ need to work.14 these problems are compounded by the fact that in many parts of asia older people are poorly educated. literacy rates tend to be lower among women than men15 and lower in rural areas than urban areas.16 older women are especially vulnerable as they usually have less labor force experi- ence, income, and assets than men,17 and they are significantly more likely to be widowed.18 labor force participation in asia differs from country to country and between men (see figure 6) and women (see figure 7). in the developing countries of asia, very high percentages of the older populations have work histories in agriculture, family-owned businesses, or self-employment (sec- tors in which there is no mandatory retirement age).19 in india, older people in rural areas—both men and women—have historically been more likely to participate in the labor force than those in urban areas.20 in China, the age structure of the agricultural working population over the last two decades has become older as younger workers have moved into industry and services.21 the percentage of older people with pension plans varies widely by country. in 2006, the estimated shares of the labor force covered by mandatory pension schemes were 9 percent in india, 16 per- cent in indonesia, 21 percent in China, and 95 percent in Japan.22 in general, countries with large numbers of workers in the agricultural, small business, and informal sectors—which have high labor turnover and weak work documentation—may find it difficult to set and enforce contributions to pension programs. about 70 percent of the workforce in indonesia23 and more than 90 percent of the workforce in india is employed in the informal sector,24 which makes it difficult for social 1 PreParing for the Challenges of PoPulation aging in asia Copyright © National Academy of Sciences. All rights reserved.

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Preparing for the Challenges of Population Aging in Asia: Strengthening the Scientific Basis of Policy Development http://www.nap.edu/catalog/12977.html fIgURe : PeRCeNTAge of lABoR foRCe PARTICIPATIoN AMoNg MeN  ANd oVeR, 10-00 80% China 70% India 60% Indones ia 50% Japan 40% 30% 20% 10% 0% 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 sourCe: Data from international labour office (2009). Economically Active Population Estimates and Projections 1980-2020: Version 5, Revision 2009. geneva, switzerland: international labour office. fIgURe : PeRCeNTAge of lABoR foRCe PARTICIPATIoN AMoNg WoMeN  ANd oVeR, 10-00 80% China 70% India 60% Indones ia 50% Japan 40% 30% 20% 10% 0% 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 sourCe: Data from international labour office (2009). Economically Active Population Estimates and Projections 1980-2020: Version 5, Revision 2009. g eneva, switzerland: international labour office. 1 PreParing for the Challenges of PoPulation aging in asia Copyright © National Academy of Sciences. All rights reserved.

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Preparing for the Challenges of Population Aging in Asia: Strengthening the Scientific Basis of Policy Development http://www.nap.edu/catalog/12977.html Box 3: IllustratIve research QuestIons on labor force partIcIpatIon, Income, and savIngs • How and why do labor force participation rates vary by age and gender? • Are preferences related to work and retirement changing over time? • How do the income benefits of economic growth vary across different age groups? • What assets do older people possess? • What are the returns to old-age savings? • What resources will future retirees have to support themselves? • How should public pension programs be structured? protection programs to reach those most in need. in China, there are significant differences between cities, towns, and rural areas—where, respectively, approximately 68 percent, 21 percent, and 4 percent of older people rely on pensions as a main source of support.25 Despite this heterogeneity, the common trend in all asian countries is that as the population ages, the ratio of workers to pensioners steadily declines. the large numbers of people entering retirement age will put increasing pressure on pension plans and may require governments to reconsider the level of benefits they can provide or the age at which eligibility may begin. Policy makers should also consider the possible effects of pension payments on family transfers and living arrangements; similarly, although pension coverage in most asian countries is not as widespread or generous as it is in Western countries, asian policy makers should nevertheless anticipate the issues and controversies that have arisen elsewhere regarding the effects of public pension programs on labor force participation and retirement.26 Box 3 lists some illustrative research questions on issues relating to labor force participation, income, and savings. heAlTh ANd Well-BeINg Perhaps the most important measure of how successful a country has been in dealing with the old- est members of its population is to be found in their health and well-being. the disease burdens and health care needs of aging societies are quite different from those of younger ones, and thus it is crucial that countries assemble accurate data on the health of their oldest citizens. this informa- tion can ultimately help inform policy discussions on such issues as the appropriate allocation of resources among competing health care needs and priorities, service delivery and financing, and access to care—especially access to long-term care. 1 PreParing for the Challenges of PoPulation aging in asia Copyright © National Academy of Sciences. All rights reserved.

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Preparing for the Challenges of Population Aging in Asia: Strengthening the Scientific Basis of Policy Development http://www.nap.edu/catalog/12977.html Box 4: the shIftIng burden of dIsease To track the toll that disease and injury takes on a population, researchers use the concept of disability-adjusted life years, or DALYs, which provide a convenient measure of the health gap between an ideal, totally healthy population and the real-world population with its various diseases, injuries, and poor health. Figures 8 and 9 show how the disease burden is expected to change in China and in India between 2004 and 2030. In both countries the total disease burden due to infectious and communicable diseases is expected to drop sharply, thanks mostly to improved prevention, while the total disease burden due to noncommunicable dis- eases, such as cancer, heart disease, and neurodegenerative disorders, will grow rapidly. In China, that growth will be due mainly to the aging of the population, as such diseases become more common with age, while in India the larger disease burden is due to the growth in the size of the population.27 fIgure 8: change In major causes of dIsease burden In chIna, 2004-2030 Somnath Chatterji, Paul Kowal, Colin Mathers, Nirmala Naidoo, Emese Verdes, James P. Smith, and Richard Suzman SoURCE: Health Of Aging Populations InP., ina And India, Health Affairs, VolN.,IsVerdes, E., 3Smith, J.P., and Suzman, R. (2008). The health of The Chatterji, S., Kowal, Ch Mathers, C., Naidoo, 27, sue 4, 1052-106 aging populations HOPE, all righand India. Health Affairs, 27(4), 1,052-1,063, Exhibit 4. Available: http://content.healthaffairs. in China ts reserved. ©2008 by Project org/cgi/content/full/27/4/1052 [accessed october 2010]. fIgure 9: change In major causes of dIsease burden In IndIa, 2004-2030 Somnath Chatterji, Paul Kowal, Colin Mathers, Nirmala Naidoo, Emese Verdes, James P. Smith, and Richard Suzman SoURCE: Health Of AgingS., pulations InP.,ina And India, HC., Naidoo,l 27, Issue 4, 1052-1063 Smith, J.P., and Suzman, R. (2008). The health of Chatterji, Po Kowal, Ch Mathers, ealth Affairs, Vo N., Verdes, E., The aging populationsbinProject HOPE, all rIndia.seHealth Affairs, 27(4), 1,052-1,063, Exhibit 5. Available: http://content.healthaffairs. Copyright ©2008 y China and ights re rv ed. org/cgi/content/full/27/4/1052 [accessed october 2010]. 0 PreParing for the Challenges of PoPulation aging in asia Copyright © National Academy of Sciences. All rights reserved.

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Preparing for the Challenges of Population Aging in Asia: Strengthening the Scientific Basis of Policy Development http://www.nap.edu/catalog/12977.html Because older people generally require sig- nificantly more health care than young and middle-aged people, the coming demographic shift is likely to place great demands on countries’ health care systems despite the increase in the years of life spent in a healthy condition. Population aging also changes the types of health care required (see Box 4). in the first few decades of life, health care is generally focused on communicable diseases and accidents; in later years, health care centers on noncommu- nicable diseases, such as cancer and heart disease, as well as functional and cognitive disabilities that become more common with age, such as problems with mobility or eyesight. (however, in some developing countries communicable diseases remain a problem throughout life.) the health infrastructures of developing countries in asia, which have primarily been centered around problems of infec- tious diseases and maternal and child health, will therefore have to be reoriented. governments need to consider how older people can afford the health care they need and the public- or private-sector approaches that might best provide it. in india, only 15 percent of the country’s population has access to formal health insurance, and 75 percent of all health care expens- es are paid for directly by individuals.28 and the annual per capita out-of-pocket health spending is almost four times as high among the older population as among working-age adults.29 in indonesia, similarly, only 15 percent of the population is covered by some form of health insurance, and it is very difficult for those aged 65 and older to obtain coverage.30 Japan, in contrast, has universal health insurance funded by individuals, their employers, and the government.31 China, where 45 percent of total health expenditures are paid for directly by individuals, falls in between.32 the health status of the older population can have important implications across a range of other domains. the healthier people are, the longer they will be able to participate in the labor force— and, more generally, lead active lives and contribute in various other ways to their communities. 1 PreParing for the Challenges of PoPulation aging in asia Copyright © National Academy of Sciences. All rights reserved.

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Preparing for the Challenges of Population Aging in Asia: Strengthening the Scientific Basis of Policy Development http://www.nap.edu/catalog/12977.html Box 5: scIence, technology, and populatIon agIng The factors that underlie the dramatic increases in life expectancy in Asia and other parts of the world are only partly understood. Current scientific knowledge suggests that human beings are not yet approach- ing a biological limit to life expectancy, so that it is possible that major increases in life expectancy—even above and beyond those currently projected—could be achieved through a combination of factors rang- ing from better behavioral health choices to new research breakthroughs that enhance understanding of the genetic, physiological, and biochemical causes of aging and aging-related diseases.33 Major extensions in life expectancy would undoubtedly accelerate the speed of population aging and potentially accentuate the various social and economic challenges associated with aging. However, scientific and technological advances in such fields as molecular biology, genomics, immunology, cell therapy, and regenerative medicine could also do much to reduce morbidity and disability among older people and make it easier for societies to accommodate demographic change. Similarly, improvements in physical infrastructure and transportation—as well as developments in bionics, robotics, and nano- technology, among others—have the potential to allow individuals and societies to more fully reap the rewards of longer life. Investments in science and technology can not only add years to life, but also “add life to years.” (Box 5 discusses the relationship between quality of life and science and technology.) health, in turn, can be affected by income and wealth. similarly, the way in which society organizes and delivers health care can change the nature of family relationships; increased prevalence of institu- tionalized care could, for example, make it easier for the primary caregiver (most likely female) to join the labor force. Box 6 lists some illustrative research questions relating to health and well-being. Box 6: IllustratIve research QuestIons on health and Well-beIng • What are the prevalence rates of various diseases and chronic conditions among the elderly? How do these vary by gender? • What are the levels of physical and mental functioning among the elderly? • Are increases in longevity associated with higher rates of disability? • How are various socioeconomic characteristics related to the health and health practices of the elderly? How does wealth affect health—and vice versa? • What are the patterns of family caregiving? • What are the rates of health care utilization among the elderly? How do they obtain care, and how do they pay for it? • How do the health benefits of economic growth vary across different age groups?  PreParing for the Challenges of PoPulation aging in asia Copyright © National Academy of Sciences. All rights reserved.