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Investing Over the Life Course: A Winning Strategy

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America is aging. Imagine a society with more walkers than strollers. The first baby boomers have reached their 60s and longer healthy life expectancy means that more people are living well into their 80s and 90s. The transformation of America into an older society creates novel challenges for the new administration. How should precious public resources be allocated across the generations? To date, most policy discussions on the implications of this "demographic time bomb" have focused on financing programs -- the solvency and sustainability of the Medicare and Social Security Trust Funds and the likely future costs of Medicaid. But population aging also raises questions about how to target new investments in education, training and preventive health.

Population aging may lead to increased competition between generations for resources, especially during periods of economic downturn, as the decades-old social contract that has been the basis of many of our entitlement programs is rewritten. As various advocacy groups vie for the attention of the new administration, such intergenerational conflict has begun to rear its ugly head.

Expectations are high that President Obama will propose major, perhaps unprecedented, investments in early childhood education. These programs are welcome and badly needed, but some advocates for children's programs are going too far, contending that youth are the only generation worthy of investment. Such a "youth-only" approach views expenditures for children as investments with long term returns for all of society while arguing that resources spent on the elderly have only short term benefits limited to the direct beneficiaries. This view belies the facts that the capacity to respond to social and behavioral interventions persists until very late in life. Many mid and late life interventions such as new skills training, efforts to enhance civic engagement and volunteerism, and programs to reduce health risks through changes in diet and exercise clearly pay off. Their modest costs are more than offset by substantial intermediate and longer term economic gains including both increased productivity and decreased health care expenditures.

Experts agree that the trajectory established early in life has an important impact on one's later socioeconomic position, health and well-being and that some childhood social programs, such as "Head Start," are very valuable. But it seems likely that some interventions spaced across the life course have cumulative benefits that are superior to the effects of interventions isolated to childhood. This may especially be the case regarding the development of cardiovascular disease.

Many programs that target the elderly have spillover benefits for younger generations, and should properly be seen as family programs. Social Security payments to older people relieve their middle-aged children of some or the entire economic burden of supporting their parents. Pension payments can do even more. In South Africa, when older women living in extended families were given a pension, granddaughters in those households were healthier. Clearly, rather than benefiting one group at the expense of another, programs can be win-win propositions for multiple generations.

While some competition between generations is inevitable, an all out "war" would be very counterproductive for all concerned. Research shows that such win-win opportunities exist in many areas, including education, training and job flexibility, retirement, welfare and health. To assure that the U.S. society that emerges from our demographic transition is productive and equitable, we should make effective investments across the life-course rather than pit generations against each other.

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