LONGEVITY GROWTH IS NO LONGER WHAT IT USED TO BE
Trend of shrinking lifespans could result in grim silver lining, says Fred Vettese
It turns out that the years leading up to 2011 were a golden period when it came to improvements in mortality. Mortality rates in this country were dropping significantly as Canadians were adding an average of 2.1 months to their lifespans in each year between 2000 and 2011.
Canada was not alone in this regard. Improvements of similar magnitude were being recorded in the U.S., Australia, Japan and throughout Western Europe. It did not seem at all far-fetched to forecast that today’s babies could expect to live to 100 and beyond.
Then something happened around 2011 to change this trend. The big increases in life expectancy that we had grown accustomed to seeing suddenly shrank to nearly zero. In Canada, lifespans have been growing by a mere 0.4 months a year since 2011, just one fifth of what was happening before 2011.
The same dramatic shift has also occurred in the U.S. and much of Europe. The U.K. and Spain have been particularly hard hit. In fact, the lifespans for certain age groups in the U.S. and the U.K. have actually shrunk since 2011.
What makes this new mortality trend so troubling is that no one is sure of the reason (or reasons) for it. Just like an Agatha Christie novel, there are many suspects, all of which look plausible.
In the U.K., it is being blamed on austerity measures that the government took after the Great Recession. The cutbacks in U.K. health-care spending, some say, is leading to more deaths.
In the U.S., deaths due to drug and alcohol poisoning, suicide, chronic liver diseases have increased sharply since 1999. Opioids, in particular, have been responsible for a spike in the mortality rate of certain age groups.
Another suspect is obesity, which is still on the rise in many countries including the U.S., Canada, the U.K. and Germany. On the other hand, obesity was already a big problem before 2011 and mortality improvements during that time were still robust. Nothing happened around 2011 to cause the impact of obesity to change suddenly. Moreover, Spain’s mortality improvement rate plunged more than in almost any other country even though Spain’s obesity rate has not changed much since 2011.
Finally, there is the possibility that all the low-hanging fruit from medical advances has now been picked. The death rate from cardiovascular disease in particular, for instance, has dropped by two thirds since the 1960s but that success will be mathematically impossible to repeat in future years.
It is possible that the death rate from cancers can be reduced significantly but it would take a breakthrough, which frankly is not on the horizon. The one problem with this theory is that Japan already has lower mortality rates than most countries and that hasn’t stopped it from achieving big reductions in mortality rates since 2011. Japan is the one outlier in the global shift in mortality trends.
There may be an element of truth to all these factors but the suspicion is that something more fundamental is afoot. After all, it seems implausible that a global trend occurred at virtually the same time in so many countries but for different reasons in each country. More likely, there is a root cause that has afflicted most parts of the globe since the Great Recession.
That root cause could be the rising gap between rich and poor. That gap has been rising for decades, of course, but it was exacerbated by the Great Recession and the actions that governments took in response to it. In support of this theory, the U.S. has one of the biggest gaps between rich and poor amongst developed countries and it also has the lowest life expectancy. Sweden has one of the smallest income disparities and it was less affected than other European countries by whatever happened in 2011 to change the mortality trend.
As for Canada, middle class incomes have appeared to be holding their own in recent years so you would think it is an exception.
On the other hand, middleincome households are being forced to spend historically high percentages of income on servicing mortgage debt (especially in its big cities). The net effect is that the middle class is doing less well than it appears.
If income disparity is indeed the heart of the problem, then its impact will be felt for some time to come since that is not something that changes quickly. As a result, mortality rates that are improving slowly or even stagnating may be the new normal. A couple of recent data points bear this out. In the U.S., 2015 was the first year in decades that life expectancy actually fell. As for Canada, the year 2017 is not yet over and the emerging mortality data suggests it will be another bad year.
There are some practical ramifications to this new trend. In the U.K. alone, PwC estimates that shifting life expectancy may reduce pension deficits by over 300-billion pounds but this may be just the tip of the iceberg. The new mortality trend could lop trillions of dollars off the cost of defined benefit pension plans and Social Security systems in North America and Europe.CPP and Old Age Security would be among the beneficiaries of this windfall.
Also, the cost of annuities should fall as insurance companies realize they have built in too much of a cushion for the impact of future mortality improvements.
This is all good from a financial perspective but as silver linings go, it is a rather grim one.