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The Aging Globe

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http://blog.nielsen.com/nielsenwire/consumer/america%E2%80%99s-future-living-to-100-amid-abundant-diversity

http://blog.nielsen.com/nielsenwire/consumer/america%E2%80%99s-future-living-to-100-amid-abundant-diversity

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The Aging Globe The Aging Globe Presentation Transcript

  • The Aging Globe: Aging Boomers, Vanishing Families, & What It All Means for Makers & Sellers of Consumer Products Doug Anderson Global Research & Development Consumer Panel Services – Homescan, Spectra, & Loyalty as seen on: nielsenwire.com
  • The Florida Test… The Aging Globe Slide
  • The Florida Test… The Aging Globe Slide
    • Italy - 2003
    • Japan - 2005
    • Germany - 2006
    • France, UK - 2016
    • Canada - 2021
    • U.S. - 2023
    • China - 2040
  • For Marketers, the Core Issues are Clear…
    • Brands supported by families with children & by younger consumers will struggle as these franchises either decline or grow slowly
    • The growing older population who will replace them will have very different needs and are themselves different from generations who came before…
      • Will lead active lives far longer
      • Better educated / more affluent
      • More politically involved / more willing to stay active
      • In better health and living longer
    The Aging Globe Slide
  • The Aging Globe Slide How We Think About Aging & Older People 18 th Century And Beyond 20 th Century 19 th Century
  • A Crown of Gold
    • “ a hoary head is a crown of gold”
    • Powdered wigs produced hair “as white as wool”
    • Jackets were cut with sloping shoulders to imitate the elderly
    • In an age of limited literacy, elders were keepers of the culture and a bridge to the next generations
    • Retirement was an essentially unknown concept, both men and women worked as long as they could
    The Aging Globe Slide 18 th Century
  • An Incurable Disease
    • The “Second Great Awakening”
      • Were human beings capable of improvement?
      • Could they be redeemed?
    • Substantial erosion of the 18 th century reverence for older people
      • “ old fogeys”
      • 25 to 40 were the “golden years”
    • In the U.S., the race to settle the west had no place for the old
      • I.L. Nashcher - “The old man does not know what is best for him…he cannot accommodate himself to…the progress of civilization.”
      • Mandatory retirement & pension plans were ways to move older workers out. Scientific Management provides a rationale…
    The Aging Globe Slide 19 th Century 18 th Century
  • A Generation Apart / Making of a Leisure Class
    • Growing numbers of older people spur government programs to provide aid to older citizens
      • U.S. holds off until the 1935 Social Security Act
    • Elderly truly become a generation apart, with status undermined by 19 th century clergy and experts, but relieved of much of the economic insecurity that plagued earlier generations, with increasing longevity and health
    The Aging Globe Slide 20 th Century 19 th Century 18 th Century
    • Retirement becomes commonplace – 1880 78% of 65+ in labor force, 1980 19% , 2006 17% (U.S.)
    • “ too old to work and too young to die”- reassess retirement to a time of leisure, need to educate people on how to live a life of leisure
    • The Baby Boom will find a new path…
  • The Aging Globe Slide How Countries Age… Falling Fertility Rates Around the Globe
  • Fertility of the White Population of the U.S. The Aging Globe Slide
  • Fertility is a Key to Aging The Aging Globe Slide
  • Why Have Global Fertility Rates Fallen?
    • Agrarian to industrial economy
    • Urbanization
    • Nutrition and healthcare advances lower mortality rates
    • Access to effective birth control
    • Working women
    • Education of both men and women
    • Other roles available
    • Delaying marriage
    • Delaying first child
    • More traditional societies have fallen the most
    The Aging Globe Slide
  • Impact of Education on Fertility in Developing Countries The Aging Globe Slide
  • Stages in the Aging of Populations The Aging Globe Slide
    • Stage One
    • Africa
    • Middle East
    • Very young, growing rapidly – median age Africa is 19 – just beginning to age
    • Fertility falling - down from 6.7 to 4.7 in Africa
    • Will develop a very advantageous age distribution, but a lack of economic development will spur emigration
    • Stage Two
    • Asia
    • Latin America
    • Caribbean
    • Slowing growth and bulk of population in prime working years today
    • Off shoring moving service jobs – leapfrog?
    • Major emerging markets for consumer products
    • Stage Three
    • Europe
    • North America
    • Japan
    • Low or negative population growth
    • Large share of labor force nearing retirement
    • Uncertain economic times coming due to aging populations
  • The Aging Globe Slide Selected Country Profiles in an Aging World Who will your consumers be?
  • Asia: A Study in Contrasts Japan
    • Oldest of the major nations of the world
      • Expected to lose 25MM people by 2050 – nearly 20%
      • By 2050 median age of 55+, 80+ persons will outnumber <14 by 1.4 to 1.0
    • Promoting fertility (at 1.27 now), but no one seems to be listening
      • Government spent $9 billion in 2003 for child care leave to promote procreation
      • But, large share of 25-44 live at home further suppressing development & spending – parasaito shinguru
    • In 2001 12% of schoolgirls agreed that “everyone should get married” -- 78% agree in the U.S.
    The Aging Globe Slide
  • Asia: A Study in Contrasts China
    • Largest nation of the world, at least for a while…
      • The top 26% of the Chinese population ranked by IQ is…
      • During the sixty minutes of this session…
        • 600 babies are born in the U.S., 2,440 are in China, 3,510 in India
      • If we took all U.S. jobs and shipped them to China tomorrow…
    • Will be passed by India by 2025
      • “ Only” about 20 million people between now and 2050 – growth rate 1.5%
        • But population over 65 will nearly triple & population over 80 will grow 6x
    • Fertility already well below replacement level at 1.73 due to One Family / One Child and many other reasons
      • By 2050 succeeding generation could be 20-30% smaller than prior one
      • Leading to a rapidly escalating sex ratio, 1.17:1.00 in total, 1.30 in some provinces, estimates of 33 million unmarriagable young men by 2020
    The Aging Globe Slide
  • Asia: A Study in Contrasts India
    • Will add 489 million people by 2050, 20% of the total population growth of the world – resources allowing
    • Fertility is falling, but doesn’t fall below replacement rate until after 2025
    • 65+ will grow from 7.5% of pop today to 20.2% by 2050, about as old as the U.S. today
    The Aging Globe Slide
  • Europe – Variations on a Theme
    • Germany, Italy, and Spain are the oldest nations of Western Europe today
      • Germany & Italy could lose 13 million by 2050, 9% of 2007 total
      • In Spain today pop 0-4 numbers 42% less than 30-34 - to break even & replace the current generation each woman must have four children
      • Much of Eastern Europe is as or nearly as old – Hajnal’s Line
    • Working age population in France will decline by 9% by 2050 while the elderly will increase by 70%
      • Elderly more vulnerable to disease and environmental changes
    • Overall in Europe there are 35 persons of pension-able age per 100 working age persons today
      • By 2050 there will be 75
      • In Spain and Italy the ratio will be 1:1
    The Aging Globe Slide
  • North America – Aging, Older, Oldest
    • Mexico
      • Fertility below replacement rate before 2015, down nearly 70% in 40 years
      • A fertility boom?
    • United States
      • Aging more slowly than the other developed nations
      • Growing
      • Median age will be 41.1 by 2050
    • Canada
      • 32% over 60 by 2050
    The Aging Globe Slide Average months per year added to each country’s median age
  • The Aging Globe Slide The Economics of Aging Populations Even if you change your portfolio to appeal to seniors, will they be able to afford your products?
  • Why Aging Matters – The U.S. Dependency Ratio The Aging Globe Slide 0 10 20 30 40 50 60 70 80 90 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 Baby Boom retires Total Child Elderly
  • Why Aging Matters – The U.S. Dependency Ratio The Aging Globe Slide 0 10 20 30 40 50 60 70 80 90 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 Baby Boom retires
    • Old folks are expensive…
      • Typical child consumes 28% less
      • healthcare resources than a working adult,
      • elder consumes 27% more
      • In the U.S. a person aged 65+ receives
      • about 11x more in Federal Government
      • spending than a child < 18
    Total Child Elderly
  • Government Care for the Elderly
    • Generally based on the positivist assumption that each succeeding generation will outnumber the prior one
    • Europe
      • High payroll taxes & benefits / Early retirement ages
      • Often very fragmented plans that are difficult to reform
      • Reforms are starting, but brought down governments in France & Italy
    • U.S.
      • SS shortfall by 2017, trust fund will be used & depleted by 2041 when income will only pay about 70% of benefits required
      • Medicare/caid to rise from 3.2% of GDP in 2006 to 9% by 2050, surpassing SS as most expensive government program by 2030, trust fund gone by 2019
      • Deep ideological differences have derailed further reforms
      • Examples from the Armed Services
        • In 2004 84 cents in retirement benefits for every $1 in active pay
        • In 2000 pension costs were 12x what was spent on ammunition, 5x what the Navy spent on new ships & what the Air Force spent on new airplanes and missiles
    The Aging Globe Slide
  • The Aging Globe Slide Are There Other Scenarios? Is there a way out?
  • Bring in the Immigrants
    • Immigrants accounted for…
      • 43% of U.S. population growth between 2000 and 2006 (60% if you count the first and second generation children of immigrants)
      • 63% of growth in Canada (all by 2030)
    • The Latin wave
      • Good for the U.S. right now, but fertility rates are falling rapidly in Latin America and populations there are aging too
      • Plus others are competing for immigrants – Hispanics are the fastest growing groups in many European countries
    • But…
      • Political representation issues & cultural assimilation issues
      • Only a partial solution since most come as adults who are themselves aging
      • To maintain the current ratio of workers to retirees the U.S. must absorb 10.8 million immigrants per year through 2050
        • A new New York size sized would be needed every ten months or so
    The Aging Globe Slide
  • Average Migrants per Million Inhabitants to Maintain Size of Working Population (2000 – 2050) The Aging Globe Slide
  • Let’s Have a Baby Boom!
    • A unique situation after WW II?
      • Lots of family plans had been deferred by the war
      • Depression era children had low expectations for the economy and found themselves in a boom, often making as much or more than their fathers
      • In the U.S. the GI Bill created the largest single generation education jump in American history
      • Expansion of inexpensive housing in newly built suburbs and government subsidies made home ownership much more wide spread, and at a younger age
      • New labor saving devices and consumer products took time out of housework provided more time for childcare (25% drop in time spent doing housework in the U.S between 1965 and 2000)
      • Folks got married at the youngest ages ever
    • Likely to happen again?
    The Aging Globe Slide
  • Still, Some Countries are Trying for a Boom…
    • Singapore has it’s own official matchmaking service, the Social Development Unit, that promotes American style speed dating with a series of seven minutes encounters
    • Russia established National Day of Conception and Procreation in 2007
      • UN projections show Russia losing nearly 25% of its population by 2050, some 35MM people (back nearly to the 1950 pop)
      • Combine that with an uncertain political future, massive corruption, the health profile of a developing nation, an environmental meltdown, & already difficult economic circumstances and you have a recipe for disaster
      • Up until the ‘60s the Soviets had a high fertility rate, but in the 60s…
        • Marriage rate dropped by 19% & the divorce rate doubled, 34% drop in babies
        • Urbanization & housing shortages
        • Fertility below replacement rates by 1964
    The Aging Globe Slide
  • The Aging Globe Slide
      • As Putin has said…
        • “ We are facing the serious threat of turning into a decaying nation”.
  • The Aging Globe Slide Implications & Impacts For makers and sellers of consumer products
  • What Will It Be Like to Live in an Aged World? The Aging Globe Slide
    • HHs with children will continue to decrease as a percent of total HHs and average HH size will decrease
    • Families with children become more ethnic more quickly than the total population
      • All U.S. HHs with children become majority minority by 2035
      • Under six majority minority by 2025
  • What Will It Be Like to Live in an Aged World? The Aging Globe Slide
    • Brands and categories with strong skews to HHs with children will experience a “ demographic drag ” from slow growth
    • Brands with older consumer franchises will enjoy a growth boom – but beware of cohort effects
  • What Will It Be Like to Live in an Aged World? The Aging Globe Slide Our cultures , which for the past 50 years have been based on the interests of young people …
  • What Will It Be Like to Live in an Aged World? The Aging Globe Slide Will, in the future, instead be based on the interests of old people .
  • What Will It Be Like to Live in an Aged World? The Aging Globe Slide
    • Our children won’t be better off than we are…
      • Incomes will be stagnant or will fall in the developed world for at least a generation
  • What Will It Be Like to Live in an Aged World? The Aging Globe Slide International boundaries may continue to erode as countries compete for immigrants, especially skilled ones
  • What Will It Be Like to Live in an Aged World? The Aging Globe Slide
    • Most adults will have few or no biological relatives.
      • In Italy today almost 60% of children have no siblings, cousins, aunts, or uncles, only parents, grandparents, and great-grandparents
  • What Will It Be Like to Live in an Aged World? The Aging Globe Slide Struggling older people could become an underclass , & will work in the kinds of service jobs young people work in today
  • What Will It Be Like to Live in an Aged World? The Aging Globe Slide Countries will struggle to provide healthcare to rapidly growing elderly populations. Access, procedures, and drugs may be rationed as spending on healthcare eclipses all other forms of government spending. Practitioners will be in short supply.
  • What Will It Be Like to Live in an Aged World? The Aging Globe Slide Mandated fertility?
  • One Final Example for What it Really Means for a Country’s Population to Age
    • In 2000, in the United States there were approximately 72k centenarians
    • By 2050, the number will exceed 834k – a fourteen fold increase (using the Bureau’s “middle range”, high range estimates exceed 4MM)
    • If we made them all live together…
      • We would need a city the size of Detroit. There are only ten cities in the U.S. today large enough to hold all of the centenarians who will be around in about forty years.
    • And remember that the populations of nearly all of the developed world are already older than the U.S. today…
    The Aging Globe Slide Number of Centenarians Over time a slightly higher percent of 100+ are male – up to 18% in 2050.
  • The Aging Globe Slide The Aging Globe Questions?
  • The Aging Globe Slide For daily news and the latest studies, reports, and whitepapers visit www.nielsenwire.com