Abstract
While the doubling of life expectancy in developed countries during the 20th century can be attributed mostly to decreases in child mortality, the trillions of dollars spent on biomedical research by governments, foundations and corporations over the past sixty years are also yielding longevity dividends in both working and retired population. Biomedical progress will likely increase the healthy productive lifespan and the number of years of government support in the old age. In this paper we introduce several new parameters that can be applied to established models of economic growth: the biomedical progress rate, the rate of clinical adoption and the rate of change in retirement age. The biomedical progress rate is comprised of the rejuvenation rate (extending the productive lifespan) and the non-rejuvenating rate (extending the lifespan beyond the age at which the net contribution to the economy becomes negative). While staying within the neoclassical economics framework and extending the overlapping generations (OLG) growth model and assumptions from the life cycle theory of saving behavior, we provide an example of the relations between these new parameters in the context of demographics, labor, households and the firm.
Highlights
Increases in productivity, technological progress and population growth have been identified as the main drivers of economic growth [1,2,3]
Rejuvenation rate (RR)—the rate at which the functions required to perform useful work that were lost to aging or disease are restored; Non-rejuvenating rate of biotechnical progress (NRPR)—the rate of biotechnical progress that increases lifespan, but does not return lost functions; Biomedical science and technology progress rate (BMTPR)—the rate at which progress in science and technology and the application of these technologies to clinical practice extends the lifespan of the population
We have introduced several novel parameters that may be incorporated into the most commonly accepted theories of economic growth in addition to frequently cited factors like population growth, technology, behavior, capital flows, and distribution of capital
Summary
Technological progress and population growth have been identified as the main drivers of economic growth [1,2,3]. The unified economic theories further build on these ideas, incorporating elements of natural selection into growth models to explain an economy’s transition from stagnation to growth [6] All of these models may be further extended to account for the rate and nature of technological advances, as well as for the lifespan, average years in the workforce, and the retirement age of the population. Studies from Japan proposed positive relationship between population aging and economic growth in a general equilibrium model of life cycle savings combined with endogenous growth and even suggested that postponing the retirement age will have a negative effect on economic growth [16]. Other theoretical models suggest the negative effect of aging on economic growth due to the increase in the dependence rate leading to reallocation of labor from non-health to health production [17]. The impact of recent advances in the biomedical sciences is obscured by the detrimental effects of unhealthy lifestyle changes, such as easy and affordable access to high-calorie foods and a lack of physical activity, which apply negative pressure to the life expectancy curve
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