Opportunities of Ageing Conference – 100413slide 1

What is wealth?And how it affects older people

presentation to

Opportunities of Ageing Conference

Dr Ganesh NanaChief Economist

Business and Economic Research Ltd

10 April 2013

Opportunities of Ageing Conference – 100413slide 2

Economics and wealth is all about

liquidityswap rates

house pricesinterest rates

inflationleverage

debthedge funds

ratings

Opportunities of Ageing Conference – 100413slide 3

Wealth is …

liquidityswap rates

house pricesinterest rates

inflationleverage

debthedge funds

ratings

people

machinery &equipment

land

buildings

water

technology

skills &knowledge

experience

businesses

networks

innovation

iwi

whānau

except economists call these resources

Opportunities of Ageing Conference – 100413slide 4

… and economics is about …• how we (choose to) use resources

(wealth) to* produce things we want, need, desire* look after, maintain, or replenish resources* improve and/or expand resources

consumer benefit investment to replace

investment to grow

Opportunities of Ageing Conference – 100413slide 5

Our choices in using wealth

resourcesor

wealth

consumergoods and services

investment to replace

investment to grow

for today

fortomorrow

Opportunities of Ageing Conference – 100413slide 6

Wealthindividual perspective

• financial• health and physical• social participation• life experiences

Opportunities of Ageing Conference – 100413slide 7

Wealth accumulation as we ageliquid financial

age

wealth

Opportunities of Ageing Conference – 100413slide 8

Wealth accumulation as we ageilliquid financial

age

wealth

Opportunities of Ageing Conference – 100413slide 9

Wealth accumulation as we agehealth and physical

age

wealth

Opportunities of Ageing Conference – 100413slide 10

Wealth accumulation as we agesocial participation

age

wealth

Opportunities of Ageing Conference – 100413slide 11

Wealth accumulation as we agelife experiences

age

wealth

Opportunities of Ageing Conference – 100413slide 12

Wealth accumulation as we age

age

wealth

liquid financial

age

wealth

illiquid financial

age

wealthhealth and physical

age

wealth

life experiences

age

wealth

social participation

Opportunities of Ageing Conference – 100413slide 13

Drivers of accumulation of wealth

Opportunities of Ageing Conference – 100413slide 14

Drivers of wealthliquid financial

• income* education opportunities* employment opportunities* abilities

• financial literacy* understanding* opportunities

• luck

Opportunities of Ageing Conference – 100413slide 15

Drivers of wealthilliquid financial

• spending behaviour• savings habits

* home ownership options• family circumstances• financial literacy

* understanding* opportunities

• luck

Opportunities of Ageing Conference – 100413slide 16

Drivers of wealthhealth and physical

• lifestyle and diet• family history / circumstances• housing situation

* living conditions* physical environment

• income• luck

Opportunities of Ageing Conference – 100413slide 17

Drivers of wealthsocial participation

• family circumstances• social situation

* isolated or connected?• status of wider networks

* schools* business* community

• income• luck

Opportunities of Ageing Conference – 100413slide 18

Drivers of wealthlife experiences

• family• networks

* schools, business, community• passion and/or opportunity to explore• income• luck

Opportunities of Ageing Conference – 100413slide 19

Drivers of wealth... and, finally ...

• endowments* whakapapa* status or history* knowledge or understanding* financial

Opportunities of Ageing Conference – 100413slide 20

Or, is wealth …• collective

* family* whānau* iwi

• nation

Opportunities of Ageing Conference – 100413slide 28

Business investmentas % of GDP

6

8

10

12

14

16

Dec 88 Dec 94 Dec 00 Dec 06 Dec 12

%

Opportunities of Ageing Conference – 100413slide 29

Government investmentas % of GDP

0

2

4

6

8

10

Dec 88 Dec 94 Dec 00 Dec 06 Dec 12

%

Opportunities of Ageing Conference – 100413slide 30

Labour force participation rate

62

64

66

68

70

Dec 88 Dec 94 Dec 00 Dec 06 Dec 12

%

Opportunities of Ageing Conference – 100413slide 31

Labour force participation rate – 60-65yos

25

35

45

55

65

75

Dec 88 Dec 94 Dec 00 Dec 06 Dec 12

%

Opportunities of Ageing Conference – 100413slide 32

Labour force participation rate – 65+yos

0

6

12

18

24

Dec 88 Dec 94 Dec 00 Dec 06 Dec 12

%

Opportunities of Ageing Conference – 100413slide 33

Govt education expenditureas % of GDP

2

4

6

8

1996 2000 2004 2008 2012

%

Opportunities of Ageing Conference – 100413slide 34

Opportunities of ageing• to contribute to accumulation of wealth

across all dimensions* life experiences* social participation* health and physical* financial* and collective

• and so to improve (increase) resources available for nation to make its choices

Opportunities of Ageing Conference – 100413slide 35

NZ 2012 population

161148148

161171

149134135

149152

147128

11692

7250

3719

8

152141142

152159

149143

148164163

156134

12197

7958

4731

18

200 150 100 50 0 50 100 150 200

Under 55–9

10–1415–1920–2425–2930–3435–3940–4445–4950–5455–5960–6465–6970–7475–7980–8485–89

90+

000s

females males

but the next 25 yrs ???

man drought