Living Better, Living Longer? Is Ageing in Line with Economic Performance?

Sustainable development in the ageing societies is investigated by several researchers and from different aspects in the European Union. One of the key messages of the so-called Stiglitz Report is that to shift our emphasis from measuring economic production to measuring people’s well-being. Well being is a multi-dimensional concept. Eight dimensions should be taken into account simultaneously to present the quality of life in different countries. Five from these 8 dimensions (material living standards, health, education, personal activities (work), and economic insecurity (among them inadequate resources during retirement and volatility in pension payments) are strongly connected to the problems of ageing society. Human development Index was the first attempt to compose different aspects of quality of life. This composite index published by UN aggregates income, education, and life expectancy at birth. These components are strongly correlated over countries and time. But the expected length of a person’s life cannot be calculated using only conventional economic measures. Non-monetary measures of people’s health and education can significantly increase the life expectancy. Pay-as-you-go pension systems strongly need credible projections for ageing tendency. The problem of estimating the increase in life expectancy requires age-specific mortality statistics, which are modeled by three factors: age, period and cohort. Mortality reduction or improvement can be projected by ARIMA models, introduced by Lee and Carter in 1992. There are several variations and extensions of the Lee-Carter model. The present paper investigates age-specific mortality statistics for Hungary and compares the projected results influencing the pension reform. Economic performance of the country will be added as a component into the mortality projection.