HOW LONG WILL YOU LIVE?….I’ve been arguing for a while that the economic projections underlying predictions of Social Security doom are overly pessimistic. It seems likely to me that both economic growth and immigration rates will be higher than the government projects, which means that Social Security is in good shape for 60 or 70 years, not 40.
But those aren’t the only projections that are critical to Social Security’s future health, and a few weeks ago the New York Times ran an article suggesting that the government’s projections of life expectancy were actually too optimistic, and thus made the system seem healthier than it really was.
I didn’t post about it because I was on vacation at the time, and in any case it was a very frustrating article, full of dueling quotes with practically no backup for their various contentions. For example:
Last year an expert panel advising the Social Security Administration found “an unprecedented reduction in certain forms of old-age mortality, especially cardiovascular disease, beginning in the late 1960’s.”
….David A. Wise, a Harvard professor who is director of the program on aging at the private, nonpartisan National Bureau of Economic Research, said: “Almost all demographers outside the government think that death rates will continue to fall faster than the decline incorporated in the projections of the Social Security Administration. Most think life expectancy will increase more rapidly than Social Security says. That’s not good for the finances of Social Security.”
For men, there’s an inflection point in 1973. Since then, male life expectancy has increased steadily by one year per decade.
For women, there’s an inflection point in 1979. Since then, female life expectancy has hardly budged. In fact, in the past two decades female life expectancy at age 65 has increased by a grand total of four months.
These numbers are so steady and unambiguous that it’s unclear why anyone thinks they’re suddenly going to start skyrocketing beyond the current projections used by the Social Security actuaries. On Sunday, the New York Times Magazine provided an explanation ? of sorts:
A 65-year-old man today can expect to live to nearly 82. According to the most likely projection, in 2080 he should expect to live to 86. [Social Security’s chief actuary Stephen] Goss says that the agency is assuming that medical technology will deliver more ”miracles.” Most demographers agree with him, and some even think the agency is not being optimistic enough. The only trouble is, as Goss notes, that over the past 20 years ”they have been wrong at every turn. There has been less improvement than we were expecting.” Indeed, the improvement in mortality has slowed significantly. And no one is sure why it has slowed. Nonetheless, the agency expects a sharp rebound over ensuing decades. Its fiscal gloominess thus depends on a speculative uptick in medical miracles.
In other words, historical data suggests that Social Security’s longevity projections are fine. In fact, more than fine: they already project higher life expectancies than the data supports, and the only reason to think they should be higher still is if you assume even more spectacular medical breakthroughs than they do.
And who knows? Maybe that’s what will happen. Then again, maybe our Big Mac consumption will outstrip medical science’s ability to save us from ourselves. But in any case it hardly seems reasonable to base current policy on unknowable future breakthroughs. For now, it looks to me like Social Security’s life expectancy projections are probably pretty reasonable.