Potential support ratios: Cohort versus period perspectives

Abstract

The ‘prospective potential support ratio’ has been proposed by researchers as a measure that accurately quantifies the burden of ageing, by identifying the fraction of a population that has passed a certain measure of longevity, for example, 17 years of life expectancy. Nevertheless, the prospective potential support ratio usually focuses on the current mortality schedule, or period life expectancy. Instead, in this paper we look at the actual mortality experienced by cohorts in a population, using cohort life tables. We analyse differences between the two perspectives using mortality models, historical data, and forecasted data. Cohort life expectancy takes future mortality improvements into account, unlike period life expectancy, leading to a higher prospective potential support ratio. Our results indicate that using cohort instead of period life expectancy returns around 0.5 extra younger people per older person among the analysed countries. We discuss the policy implications implied by our cohort measures.

Keywords:

• potential support ratio
• longevity risk
• retirement age
• life expectancy
• cohort mortality

ORCID

Søren Kjærgaard http://orcid.org/0000-0003-1793-9447

Vladimir Canudas-Romo http://orcid.org/0000-0001-6532-0089

Notes

1 Søren Kjærgaard and Vladimir Canudas-Romo are at the Max-Planck Odense Center on the Biodemography of Aging, University of Southern Denmark, J. B. Winsløws Vej 9B Odense C, 5000 Odense C, Denmark. E-mail: [email protected]

2 The authors wish to thank the editors and three anonymous reviewers for their helpful comments and suggestions. Many thanks also to Marie-Pier Bergeron Boucher and Jonas Wastersson from the Max-Planck Odense Center on the Biodemography of Aging and to Stine Ingemann Thomsen and Shammi Luhar for all their suggestions on how to improve the paper.