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Dimitri B. Papadimitriou (ed.), Government Spending on the Elderly, Palgrave Macmillan, Basingstoke, Hampshire, 2007, 432 pp., hbk £70.00, ISBN 13: 978 0 230 50061 7.

Published online by Cambridge University Press:  08 January 2009

BRYN DAVIES
Affiliation:
Union Pension Services Limited, London, UK
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Abstract

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Reviews
Copyright
Copyright © 2009 Cambridge University Press

The chapters of this heavyweight volume are based on papers at a conference in April 2006 with the same title organised by the Levy Economics Institute of Bard College in New York State and funded by the Smith Richardson Foundation. With 13 chapters and 22 principal contributors, plus another 12 authors who provide comments on individual chapters, the book covers various issues to do with pension provision and, to a lesser extent, health care for older people. It is, unsurprisingly, heavily orientated towards the situation in the United States, with only four of the authors currently working in other countries. The running theme is uncontroversial, that the prospective ageing of the US population will result in a significant growth in the number of beneficiaries of US government entitlement programmes, and that given the programmes' rules and rapidly escalating health-care costs, there are bound to be pressures on government spending as well as challenges for economic growth. It should be understood, therefore, that this book is not a comprehensive description of current government spending on older people, but instead describes examples of current studies into what, in the longer term, will be ‘the forces that drive government spending on the elderly’ (p. 2). What this means, in practice, is that the issues covered by the book are more disparate than the title might suggest.

As examples of the book's diverse subjects, individual chapters describe demographic trends and their implications for social welfare systems; explore the statistical correlations among various dimensions of the generosity of European welfare states; report results from the Levy Institute Measure of Economic Well-being; describe the differing retirement prospects for women and men; consider the effects of wage growth on the long-term solvency of US Social Security; assess the changing role of employer pensions in the US; explore alternate means of financing the retirement and health care of older citizens; offer stochastic analyses of the potential impact of various reform proposals; and consider the adequacy of retirement resources among the soon-to-retire. The book presents various opinions about the future of government spending on older people but in general does not subscribe to apocalyptical views. Wray, for example, states that ‘the likelihood that … developed nations taken as a whole can face a real crisis is highly improbable, for the simple reason that demographic changes are too small relative to the growth of output that will be achieved even with low productivity increases’ (p. 53). Nevertheless, most of the contributors still incline to the view that the need to cope with an ageing population requires action in the near term to forestall more difficult choices in the long term.

The commentaries that follow each chapter are valuable, although they vary in their approach. Some simply extend the arguments made in the chapter itself but others provide a critique. For example, Tuljapurker's chapter presents a projection of Social Security balances over the very long term, and Burdick comments, ‘forecasting 300 quarters ahead is darn near impossible’ (p. 267) and that while making forecasts might be necessary, they need to be accompanied by an assessment of the inevitable uncertainties. The editor provides a useful overview of the contents in the introduction. He also identifies particular areas for further research that are highlighted by the contributions, including the extent of the progressivity of pension provision from a lifetime perspective; retirement behaviour including the interaction between the formation of social norms and the institutional environment; the reasons for and the impact of declining health-care coverage and ‘soaring’ costs; and the impact of changes in household structure and the relationship between women and paid work. Most of the chapters are written as contributions to academic economics. They vary in their accessibility to the non-specialist reader and will, perhaps, be of greatest use to readers who are already familiar with current debates in this area of study. What is also useful to have, in a book that is as wide-ranging and as dense as this one, is both an author and a subject index.