Studies in the Economics of Aging.

Grimes, Paul W.

This volume represents the fourth book in a series from the National Bureau of Economic Research on the economics of the elderly population. The format of the book is familiar to all previous readers of an NBER text. Studies in the Economics of Aging is an edited collection of eleven papers presented at an NBER conference in the spring of 1992. Most of the authors represented here are noted specialists in the field and many received support through the National Institute on Aging, U.S. Department of Health and Human Services, for their research. Following the style of past NBER conference paper collections, a brief critical review by another researcher is provided for each article.

The book is divided into seven major sections. In the first, a paper by Shoven, Topper and Wise explore the impact of our aging population on government spending. The authors identify which federal programs concentrate their spending on the elderly and project the effects of future demographic changes on program budgets. Their results indicate that as the U.S. population ages, the budgetary requirements of existing programs will mushroom and may well crowd-out new government initiatives.

The second section of the book includes two papers on death rates and life expectancy. Both papers illustrate the uncertainty in projecting mortality in the elderly population. Modern medicine and improvements in nutrition and life-style have made it difficult to predict life expectancy for those who will retire over the next several decades. The paper by Vaupel and Lundstrom discusses the fascinating controversy between the "limited life-span" and the "mortality reduction" paradigms. The first holds that there is a natural limit to the length of human life and that modern advances can only reduce the variance around this limit. The latter holds that future improvements can reduce mortality rates at all ages, even among the oldest of the old. Obviously, the accuracy of demographic forecasts depends on the validity of these competing views.

The third and fourth sections of the book deal with saving for retirement and retirement behavior. Two of the chapters in these sections are empirical studies. One examines the role of 401(k) plans on the overall level of saving for retirement and one examines the effect of pension plans on the timing of retirement. Nothing new or very exciting emerges from these papers. The remaining chapter is a theoretical piece by Edward Lazear entitled "Some Thoughts on Saving." Lazear postulates that differences in savings rates over time and between nations can be explained only by differences in tastes and time preferences. His conclusion is pure Chicago School - government intervention to encourage more saving will only lower social welfare.

Demographic changes and housing values are explored in the fifth section of the book and international comparisons of several aging issues are discussed in the sixth section. The seventh and concluding section of the book deals with long-term care of the elderly and policy issues. Each of the chapters in these sections presents an empirical study and all are well documented with numerous tables and graphs. The conclusions of the authors are straight-forward with no major surprises.

Studies in the Economics of Aging contains a wealth of information concerning an area that will continue to become more important as the years go by. For those practicing in demographic economics and related fields, the book is highly recommended.

Paul W. Grimes Mississippi State University