Population Ageing and Pension Economics

Abstract

Population ageing puts pressure on the sustainability of public insurance systems and increases the individual responsibility for retirement security. This course provides an overview of the economics of ageing and focuses on pensions and retirement decisions. It introduces participants the state-of-art knowledge, theories, and econometric methods to conduct research in the related areas.

Objective

The course aims to provide an understanding of the economics of ageing, with a focus on pensions and retirement. After completing the course, participants will be able to: • Understand the basic economic aspects related to demography, social insurance and retirement. • Describe the ongoing demographic transitions in developed and developing countries. • Understand the basic structure of pension systems. • Discuss the risks and merits of different pension systems and reform options. • Understand the typical research designs and methods for policy evaluation relevant to retirement. • Understand the theoretical framework to analyse individual consumption and savings behaviours over their life cycle. • Understand key behaviour issues relevant to retirement decisions. • Identify research questions related to population ageing.

Content

The course introduces students to the economics of population ageing with a focus on pensions and individual retirement behaviour. The course has three parts. The first part provides an overview of the causes and economic consequences of population ageing. Topics include: - Measurements of ageing, and current situations of population ageing around the world. - Mortality, fertility, and their determinants. - Mortality compression, healthy life expectancy, health costs, and gender gap. - Design of pension, health, and long-term care insurance systems. The second part discusses pension systems and relevant policies. Topics include: - Impact of pension and retirement policies on the labour market, health, long-term care, wealth and savings. - Pension reform options and their consequences. - Gender inequality and inter-generational fairness. - Financial risks in pension funds and variable annuities. The third part of the course focuses on household financial planning for retirement. Topics include: - Empirical evidence about consumption and savings in retirement. - Retirement savings puzzle, annuity puzzle, and demand for long-term care insurance. - The life-cycle framework to analyse how individuals should plan for their savings, investment, insurance, and other retirement-related decisions. - Behaviour issues that could affect retirement-related decisions, such as inertia and default, peer effect, framing, hyperbolic discounting, mental accounting, and loss aversion. - Role of financial literacy. - Typical experimental designs and econometric methods to examine issues in retirement planning.

Resources