Abstract
We raise a number of concerns as to how rapidly the world is ageing, and not just the developed world. Whereas there is much coverage of the forthcoming budget problems facing the developed world in terms of dealing with commitments to the elderly through programmes such as Medicare, Social Security and Medicaid in the USA, there is less awareness that much of the developing world is ageing at a more rapid rate and is, in fact, less prepared for handling its ageing population. The article’s purpose is not only to increase awareness of the coming problems, but also to point out specific issues that marketers need to devote much attention.
Introduction
Everyone is aware that the developed world is ageing; what most are unaware of is that the developing world is ageing at an even faster rate (Chan, 2012). For the first time in recorded history, there are more people over 60 years old on the planet than there are children under 15. Half of all the humans who have ever been over 65 are alive today (The Economist, 2014). The world has never been so OLD and it is getting older rapidly.
Accompanying this major demographic change are changes in the role of the family that interact with the phenomenon of ageing. The result is a shift from traditional forms of economic and social support for the elderly to public means, making the issue of the quality of life (QOL) increasingly a matter of relevant public policies.
In this environment of change, most systems, including marketing ones, are not prepared for an ‘old culture’. It is the purpose of this article to describe these demographic and cultural changes in both the developed and developing worlds, discuss the alternatives for economic and social support of the elderly and finally examine the dilemmas these create for public policy and marketing systems.
Literature Review
Demographic and Social Changes
The Ageing Population: In the last six decades, the percentage of people in the world over 60 increased from 8 per cent to 10 per cent. In the next two decades, it will increase to 22 per cent, seeing an increase from 800 million people over 60 to 2 billion. This change in proportions is the result of two trends: longer life expectancy and lower fertility rates.
Until the twentieth century, the average life expectancy globally was 30 (Williams & Krakauer, 2012). Advances in medicine and public health have lengthened life expectancy in both developed and developing nations. Between 1950–1955 and 2005–2010, average life expectancy in developed nations increased from 66.0 to 77.8 years; in developing nations it was even more dramatic, rising from 51.7 to 67.7 in the same time frame (Romay & Sandberg, 2012). At present, about two-thirds of all people over 60 live in developing countries (United Nations Population Fund & HelpAge International, 2012, p. 21). By 2050, 80 per cent of older people will live in what are now low- or middle-income countries (Beard, 2010).
It is well known that fertility rates are falling globally; what is not well known is that almost half of the world’s population lives in countries with fertility rates of 2.1 children per household or less (2.1 is the replacement rate needed to keep a country’s population stable) (The Economist, 2011a). Further, at this point, there is an age split between old (developed) and young (developing) as can be seen in Table 1; however, that will be changing very rapidly, with some exceptions. The median age of Sub-Saharan Africa is less than 20, while in India it is under 25. If those areas of the world can solve their education and corruption problems, their demographics may bode well economically for the rest of this century (The Economist, 2011b; Zahidi, 2012). However, even though the median age of Sub-Saharan Africa is expected to remain relatively low, its projected growth will result in huge numbers of elderly. Ageing issues in Africa have received little attention due to the fact that it is so young. Fertility rates are dropping in general, but they are still as high as 7 (in Niger). The population of Africa in 2012 was 1.1 billion, but is expected to grow to 3.6 billion in 2100 (accounting for 80 per cent of the additional people in the world). Africa will still be the youngest region of the world then (its median age is now 19.7 and expected to be 26.4 in 2050). But the number of people over 60 will grow 13 times by 2100, from 56 million to 716 million (Aboderin, 2012). That will create an age-quake in Sub-Saharan Africa. At present, only Japan has more than 30 per cent of its population over 60; it is estimated that, by 2050, 64 nations will have at least that proportion of elderly in their populations (United Nations Population Fund & Help Age International, 2012, p. 21).
Percentage of the Population over 65 in 2012
The Gender Mix: When we discuss the elderly, we are talking about predominantly female populations. The majority of people over 60 are female: India 55 per cent, China 59 per cent, Europe 63–66 per cent, Korea 70 per cent, Russia 76 per cent. And the relative proportion of the population, that is female, increases when older age groups are considered. In general, female life expectancy is closer to that of males in the developing world, as the lower status of women there results in problems with nutrition and lack of access to health care (Zahidi, 2012).
The Changing Role of Family: Family is a topic central to ageing, as most of the world has a history of the elderly being taken care of by family. Traditionally, multi-generational families lived together, or in close proximity, providing both economic livelihood and social support for their elderly members. However, the fraying of family ties is likely to create serious threats to the QOL of the elderly globally.
Globally, about 60 per cent of people over 60 live with younger family members; about 40 per cent live ‘on their own’. However, in developed countries, 74 per cent of men and 70 per cent of women over 60 live by themselves or with their spouse (only). By contrast, in developing countries, 29 per cent of men and 27 per cent of women over 60 live alone or only with spouses. These differences are the result of a number of trends.
Belk (2000) observed that many new elites in Zimbabwe had broken with the custom of sharing with the extended family. Richmond and Gestrin (1998) discussed the traditional system of Social Security (in the true sense of the word), noting that it provided refuge for the disabled and mentally ill, and redistributed resources where they are needed. They also noted that it had drawbacks as it served as a disincentive to capital accumulation and personal achievement. They also noted another force; the Pentecostal Church had grown rapidly, preaching the protestant ethic and spirit of capitalism (the gospel of wealth and prosperity). Furthermore, they made it easier to ignore extended family needs by making their members renounce all relationships with family members who were not members of the church. Thus, the loosening of extended family ties is much more common there than ever before.
China represents an instructive case study as to changes in filial piety in the developing world. As a society, it has traditionally relied on family support to take care of the elderly. The Confucian dictum is ‘while your parents are alive, you should not travel far afield’. However, a ‘4-2-1’ family structure has developed, with one child expected to take care of two parents and possibly help with grandparents as well. Such expectations are infeasible for many young people. Furthermore, with only one child to spoil, parents and grandparents have done that well in the last three decades. As a result, many young Chinese adults no longer see filial piety responsibilities as obligatory. With government attempts to urbanize rural residents (with limited success), and the presence of jobs for the newly educated young people in urban areas, parents are finding their children to be increasingly far afield.
Immigration: One factor that affects the relative proportions of young and old in any society is immigration. Roughly 3 per cent of the world’s population lives in a country other than their birth country. Of those approximately 210 million people, it is estimated that about 5 per cent are political refugees; the vast majority have moved, either temporarily or permanently, to find economic opportunity.
Put differently, most immigrants are working-age people. Obviously this increases the proportion of older people in the country or area experiencing out-migration and increases the proportion of working-age people in the country or area that receives the immigrants. In general, developing nations experience net out-migration, with even higher rates of out-migration from poorer countries. Jamaica, with a per capita GDP near the world median, has a population of 2.3 million, with approximately 900,000 Jamaicans living in the USA, Canada and Great Britain. The Philippines, with a per capita GDP about half the world median, had 10 per cent of its population living abroad in 2002. Of these, almost 80 per cent were women (Episcopal Commission, 2003). Developed countries are the destinations of most of this immigration; thus, the proportion of the elderly in the population of the USA would be increasing even faster if it were not for in-migration.
Historically, most of those who immigrate are men. However, that condition has been changing and it is now estimated that about half of all immigrants are women. And, like male immigrants, they are mostly of working age.
The phenomenon called urbanization is, in effect, intra-country migration. It usually occurs for the same reason, as immigrants seek economic opportunity, and in most countries involves as many women as men. Urbanization not only depletes rural populations but leaves rural areas with a higher proportion of older residents. Urbanization contributes to the decline of the traditional role of family in an economic sense but, perhaps more importantly, reduces the number of younger women who would care for the elderly.
With longer life expectancy and reduced fertility rates, the world’s population is ageing in both developed and developing nations. Immigration, whether among or within nations, exacerbates the effects of ageing for many nations and especially within nations that are experiencing rapid urbanization. Furthermore, demographic changes are putting increased pressure on the traditional family as a source of support, both economically and socially, for the elderly.
Effects of Changes on the Quality of Life of the Elderly
We will start this section by defining some terms. One is ‘elderly’, which has traditionally been defined as being older than a certain age. Most generally, this age is the ‘normal’ retirement age, but this varies from country to country. However, most UN and WHO data bases use a cut-off of 60 before one is elderly. This will be discussed later in the article but, for the present, it should be noted that interpreting research conducted in different societies should take the possibilities of different definitions into account.
Quality of Life: QOL is another term that is defined, both conceptually and operationally, in a vast number of ways. Farquhar (1995) noted that the term is used in a wide variety of disciplines including sociology, psychology, medical and nursing science, economics, philosophy, history, geography as well as marketing. As one can imagine, the varying definitions of QOL will put more relative emphasis on elements that associate most closely with the discipline’s foci: health in medical and nursing science, social relations in sociology, mental acuity in psychology and so on (Farquhar, 1995; Gabriel & Bowling, 2004). In marketing, while there is lip service to health, much more emphasis is placed on consumer well-being and the nature of the interactions with the marketplace.
The domains and facets for measuring QOL specified by the WHO (1997) add some clarity: physical health, psychological (body image, self-esteem), level of independence (mobility, dependence on pharmaceuticals and medical aids), social relationships, environment (financial resources, infrastructure, home environment, access to quality health care) and spirituality.
In short, almost all definitions of QOL are multidimensional and, in this section, QOL is seen as consisting of three interrelated dimensions: economic well-being, physical health and one’s place in the social order.
Economic Effects: A population consisting of proportionately more elderly and fewer people of working age presents at least two major issues. First, regardless of how the society chooses to provide income for the elderly, the simple fact is that there are fewer workers to support those who are not in the labour force. Second, generally, older people have less money to spend and that which they have is spent on different goods and services than those of working age. This affects markets and the nature of working people’s jobs.
To begin with the effects on the incomes of the elderly, most developed countries rely heavily on defined benefit pension plans that are essentially pay-as-you-go systems. For example, current payments for Social Security and Medicaid/Medicare by those in the workforce in the USA essentially pay the promised benefits to current elderly plus assorted others who qualify for support. This system works only as long as you have many more paying into it than receiving transfers from it. While North Americans hear a great deal of discussion about problems with entitlements (Social Security, Medicaid, Medicare and so on), especially during election years, the USA and Canada are not facing the budget problems encountered in the rest of the developed world (and parts of the developing world). As Table 2 reflects, the USA and Canada would seem to be in far better shape than countries such as Italy, France, Brazil and Japan.
Pension Commitments in Assorted Countries
Nonetheless, the current focus on deficit reduction in the developed world has put great pressure on existing pension plans for millions of workers and threatens Social Security and health care schemes (Daniels, 2012). One plus point is that fertility rates in developed countries are dropping faster than the elderly are becoming more numerous, thus draining economies less to pay for younger dependents.
One country that we might not expect to be on this pension problem list is Brazil, which is quite youthful. As one economist in Brazil noted, its pension programme is absolutely the most generous in the world (The Economist, 2011a). Italy has three times as many as people over 60, but Brazil pays almost the same percentage of GDP in pensions despite having only 10 pensioners for every 100 15- to 65-year-olds. As of 2012, government workers were making no contributions but pensions (US$2,150/month) were replacing 75 per cent of average income. The issue is exacerbated by a very flexible retirement policy which allows workers to retire after about 35 years of contributions. Thus, the average retirement age is 54 for men and 52 for women, with one-tenth of 45-year-olds receiving pensions. Very few elderly are below the poverty line, whereas one-third of Brazilian children are (The Economist, 2011a).
Not unexpectedly, the Brazilian government is trying to chop the pension programme somewhat. Payroll taxes are 32 per cent of gross salary as of 2012. If nothing is done to the pension programme by 2050, the tax rate would need to be 86 per cent (The Economist, 2011a). Clearly, Brazil must make changes while it is still a relatively ‘young’ country.
China is another country facing serious problems in funding pensions. The one-child policy has helped reduce the fertility rate greatly to its 2010 level of 1.56, far below that of the USA (2.08, which is essentially the replacement level mentioned earlier). Prior to implementation of the one-child policy, the fertility rate had dropped from 5.8 in 1970 to 2.7 in 1978. It is estimated that the one-child policy has prevented about 400 million births (Bailey, Ruddy & Shchukina, 2012).
At the same time, China’s rapid economic growth has spurred major increases in longevity. The median age in China is expected to catch that of the USA in 2020 and that of Europe in 2030. In fact, Chan (2012) noted that China’s situation is converging to that of Japan’s. The number of people over 60 in China will be more than double from 181 million in 2010 to 390 million in 2025 (or about one-fourth of the people in the world over 65 then) (The Economist, 2012e).
The Chinese government foresaw problems with the traditional form of social care for the elderly and started a pension programme in 2000. Bloom, Jimenez and Rosenberg (2012) note that 21 per cent of Chinese are covered by pension funds, compared to over 83 per cent in the Organisation for Economic Co-operation and Development (OECD) countries. The government’s goal is for its people to retire on 60 per cent of their final wage; now the average monthly pension payout in urban areas is 1,500 yuan (US$110), while rural pensions can be as low as 55 yuan. Forty million retired civil servants, teachers and state-employed doctors receive pensions of about 90 per cent of their final wage (with most making no contribution before retirement). The pension for non-government employees is about 40 per cent of their salary.
The expected shortfall in 2013 was 18.3 trillion yuan, or about 150 per cent of GDP (Roberts, 2012; The Economist, 2012e). In urban areas, it is likely that retirement ages will need to be increased about 5 years from the current levels of 60 for men, 55 for white-collar women and 50 for blue-collar women. As noted above, the pension discussion is basically only appropriate for the 50 per cent of the Chinese population who live in urban areas. As one rural elderly Chinese woman noted, ‘retirement’ is an unused word in the countryside (The Economist, 2012e). Apparently, the logic behind the relatively high pensions paid to retired civil servants was the supposed trade-off between low salaries while in the workforce but reasonable funding during retirement. Surveys indicate that 93 per cent of Chinese oppose raising the retirement ages (Roberts, 2012).
A second implication of a population with relatively more elderly people involves the consequences of changing patterns of consumption. With less money to spend, increasing age produces declines both in absolute dollar terms and as a proportion of income. Needs for food, drink, apparel, transportation, entertainment and many other product categories diminish with increasing age. One obvious exception is health care. As a population ages proportionately, more and more will be spent on health care. We know that medical costs increase rapidly with age, especially as the individual approaches death. Bloom, Borsch-Supan, McGee and Seike (2012, p. 79) report that
it is estimated that between 10% and 12% of total US healthcare expenditures are for care at the end of life, much of it in the final 30 days before death, with perhaps most of it representing little or no real potential for medical benefit, comfort or informed choice.
In the OECD countries, the over-65 age group accounts for an estimated 40–50 per cent of all health care spending and their per capita care costs are three to five times those under 65.
The effect of all of these shifts are felt by all industries; there is a relative increase in the need for care-giving workers, many of whom are relatively low paid, and a relative decrease for workers in the production and delivery of other goods and services. Other, less obvious, effects include the fact that television watching is a major source of entertainment for the elderly as those over 50 make up the largest share of the TV-watching population (The Economist, 2013a).
Immigration, Remittances and Social Effects: When people of working age relocate to another country or to a different part of their home country, it is generally for economic betterment. Some move with the intention of returning, some move to stay and some move to prepare the way for other family members. But no matter what their intentions may be, almost all will feel an obligation to send money ‘home’ (Gentry & Mittelstaedt, 2012). Internationally, these remittances rival direct foreign investment as a source of income to many developing nations. And, more to the point, unlike foreign investment, remittances are direct payments to family members, often elderly members, and an important source of income.
However, money is no substitute for the care given by family members or community friends. When the immigrants are women, the traditional caregivers, the effects are especially acute. Magnified by the deaths of young women from HIV/AIDS, as in many developing countries, the effects can be dramatic. For example, Upton (2003) describes the situation in Botswana. Historically, ‘fostering’ was not uncommon with a daughter sending her children to her mother to provide household assistance and other tasks. This arrangement provided both children and older women with structures of support. ‘Today, however, with increasing deaths due to the HIV/AIDS epidemic, greater numbers of children are living with and being supported by women relatives. The fosterage system remains in place but it is being stretched to the limit’ (p. 316).
Note, however, that there may be a positive element to fostering; in addition to the providing companionship and assistance with daily tasks to the elder caregivers, the fostering system gives older people a positive role in their society. Being responsible for a child or children may help an older person ‘remain young’.
Public Policy Dilemmas
The combination of proportionally more elderly and fewer working-age persons in the population and the reduction of family and small community support systems for the elderly—often magnified by immigration—are changing the context of the QOL of seniors. What was once a family matter is now the province of impersonal agencies—the government, charities and the marketplace. This section discusses the dilemmas it presents for public policy; the following section will discuss those posed to the market and, especially, marketing scholars.
Dilemma 1: Can Individual and Family Support Systems Be Preserved?
In a society of landowning farmers and self-employed tradesmen and artisans, some individuals have been able to accumulate capital to support themselves in retirement. In a society where most people are urban-dwelling employees or self-employed providers of personal services, this form of retirement seems less likely. But, of course, economics may be overcome by cultural attitudes and capital accumulated for retirement through saving and investing.
Saving and Investing for Retirement: Given that the USA is the most individualistic country in the world, one might expect that Americans would save for their own retirements, but the 2009 Retirement Confidence Survey by the Employee Benefit Research Institute showed that 53 per cent have total savings less than US$25,000, excluding their home value and any defined benefit plans. Of those more than 55 years of age, 29 per cent have less than US$10,000 in retirement savings (Ellen, Weiner & Fitzgerald, 2012). It is estimated that 50 per cent of American households are at risk of being unable to maintain their standard of living in retirement (McHugh et al., 2013). To counter this situation, some countries are beginning to force (or nudge) workers to save more for retirement. In 1993, Australia passed a law that makes retirement savings mandatory and the accounts cannot be touched until retirement. In 2012, the UK started requiring employers to start automatically enrolling most employees in pension plans. In 2006, the USA started encouraging companies to require employees to opt out (instead of opting in) of 401(k) accounts (McHugh et al., 2013).
The view that one should take care of oneself during retirement has traction globally. For example, in four of the six East Asian countries (Singapore, Hong Kong, Taiwan and South Korea) included in the study of Jackson, Howe and Peter (2012), the modal response to ‘Who, ideally, should be most responsible for providing income to retired people?’ was retirees themselves (through their own savings). In Malaysia, that response was nearly as high as the modal response there (the government). In China, however, only 9 per cent responded that retirees themselves should be responsible. It should be noted that the percentages for the four possible responses (retirees themselves, government, former employer and grown children) summed to well over 100 per cent. One likely explanation is that many believed that they had contributed to their retirement through government or employee programmes, and those contributions also constituted ‘saving’ for their own retirements.
Preserving the Tradition of Family Care: On 1 July 2013, the Chinese government introduced a law requiring children to visit or keep in touch with elderly parents. The same day, a court ruled that a daughter had to visit her 77-year-old mother and to help her financially, in a lawsuit in which the mom sued the daughter. The daughter is now required to visit her mother once every two months and on at least two national holidays a year (Russo, 2013; The Economist, 2013b). It appears that traditional ‘Social Security’ relations are indeed fraying.
Legally enforced responsibility for the elderly is not limited to China. Laws in 20 states in the USA require family members, for the most part adult children, to support their financially needy relatives, which can include elderly parents who no longer have an income or disabled adult children who are unable to support themselves (Russo, 2013). Most of these laws, which were among the original laws of the states, have not been in active use since the Great Depression. In fact, most states repealed them in the 1950s to 1970s when the elderly started receiving reasonable Social Security and Medicare transfers. However, recent lawsuits in Pennsylvania and South Dakota have been won by needy parents suing their adult children (Russo, 2013).
In the end, saving and investing for one’s own retirement makes one’s retirement income subject to the risks of the market. This fact may account for the relative lack of political support for proposals to ‘privatize’ the US Social Security system. As for family support, one may question how realistic that is in a modern, urbanized, service-oriented society in which a large proportion of both men and women are employed outside the home.
Dilemma 2: Should Working Life Be Extended?
Raising the Retirement Age: One of the major economic problems with an ageing population is produced by the increasing proportion of retired workers compared to those of working age. A frequently suggested policy change is to raise retirement levels, which Cuba, France, Germany, Greece, Spain and the UK have done and Japan and China are considering very seriously. The USA has been raising gradually the age at which one can qualify for full Social Security benefits; for anyone born before 1947, that age is now 66. The ‘retirement age’ has increased such that those who were born in 1947 or later will not qualify for full benefits until they reach 67. Retirement age changes primarily apply to the developed world, as people in the rural areas of the developing world generally work until they can no longer do so and then are dependent on their children or on remittances.
To the extent the ‘retirement age’ is affected by pension qualifications, raising the retirement age is a matter of public policy and, hence, a political issue. As the recent French experience demonstrates, this may not be an easy thing to accomplish; in the end, raising the retirement age may require a significant ‘selling’ task and marketers may become involved.
Encouraging a Longer Working Life: Recent Gallup polling shows that the age at which people expect to retire has been increasing over the past several decades (Harter & Agrawal, 2014). While some respondents feel that they are forced by economic circumstances to work past the normal retirement age, others choose to work because they enjoy what they are doing. This means that another possible policy change is to rethink business practices, encouraging older people to work even if it is part-time. Early portrayals of the elderly in media used a lens of decline and diminished value, emphasizing the burdens of being old (Milner, Norman & Milner, 2012). As Schau, Gilly and Wolfinbarger (2009) note, the thought decades ago was that one ‘retired to die’. But, as they make even clearer, the elderly, especially in the developed world, frequently have many more productive years after retirement. Some 65 per cent of American men aged 65–74 with a professional degree are in the workforce, compared with 32 per cent of men with only a high school certificate. Nearly half of China’s workers between 50 and 64 have not completed primary school (The Economist, 2014).
Furthermore, numerous authors have discussed benefits associated with keeping the elderly in the workforce. Cirillo (2013) notes that the elderly now exercise twice as much as the previous generation. Biggs, Carnstensen and Hogan (2012) note that older adults’ social capital has been overlooked. They have accrued knowledge and experience, institutional memory, understanding of the ways things interact with each other and the ability to put single events in wider perspective. Carstensen and Fried (2012) suggested that, in many areas of expertise, practice compensates well for declines in processing efficiency and that the old can generate more effective solutions in emotionally-charged situations. Biggs et al. (2012) state that meta-analyses of existing literature comparing older and younger workers show very little evidence for declines in productivity or performance with increasing age. One possible disadvantage to having more elderly in the workforce is that it might limit opportunities for advancement for younger employees. However, Biggs et al. (2012) state that there is little evidence that younger generations resent the continued workforce participation of older adults.
In spite of all the positive benefits, a substantial proportion of people retire at, or before, the normal retirement age. For example, the US Social Security system contains a financial incentive to delay retirement. Under current law, it is possible to begin drawing benefits at the age of 62, with the amount being frozen at 80 per cent of the recipient’s full benefit, now available at the age of 66. By delaying the start of benefits from the age of 66 until the age of 70, a recipient can increase his/her benefits by about 8 per cent per year, an increase of about one-third over those taken at the age of 66. In spite of this incentive, in 2012, 41 per cent of men and 47 per cent of women began drawing benefits at the age of 62, while only 1 per cent of men and 2 per cent of women delayed taking benefits until the age of 70 (Bernard, 2013).
In the end, the larger dilemma for public policy is ‘How can older workers be retained in the workforce? Should there be a single retirement age for everyone? And, if not, what responsibility does society have to provide some sort of safety net for those who opt to retire before others and, eventually, need a safety net?’
Dilemma 3: Can Individual Autonomy Be Preserved?
No doubt most elderly people would prefer to live in their own homes or other familiar circumstances as long as they can. Public policies to encourage that include ‘homestead exemptions’ for property taxes, and such programmes as Meals on Wheels and visiting nurses. However, there are economies of scale in the provision of many services, especially medical; if the elderly lived in ‘homes’, these services may be delivered much more efficiently.
However great the efficiencies of gathering the elderly into places where care can be provided more efficiently, the sheer numbers make this a daunting task. For example, it has been projected that Germany’s elderly population will need twice the current level of nursing home personnel by 2050, and an additional 800,000 beds (de Pommereau, 2013). Additionally, as caregivers in Germany have a bad reputation (de Pommereau, 2013), the QOL for German elderly appears likely to face problems in the future.
Nursing homes are a growth area in China, though in their infancy. China has about 38,000 institutions, with 2.7 million beds for the elderly. This covers about 1.6 per cent of the population over 60; the developed world has beds for about 8 per cent of those over 60 (Balfour & Kahn, 2012). About 20 per cent of Chinese rest homes are non-government owned, with some sponsored by Christian donors who require residents to convert (or at least be open to converting). The government has not changed greatly its orientation towards religious groups, but it is also very aware of the growing needs of its society and its inability to meet them. One example is Hangzhou City Christian Nursing Home which opened in 2006 with 500 beds, with it taking four years to fill them. In 2012, it had 1,400 beds and a waiting list of over 1,000. It receives a local government subsidy of US$1,600 (10,000 yuan) for each bed (The Economist, 2012b).
Finally, at what seems like one extreme case of taking the economies of scale approach, some countries are sending some of their elderly to another country to achieve even lower costs. For example, German elderly are beginning to be exported to nursing homes outside Germany that are far less expensive. Over 7,000 Germans live in retirement homes in Hungary, 3,000 in the Czech Republic and 600 in Slovakia. There are no figures for Greece, Spain, Ukraine, Thailand and the Philippines, which are reputed to be the main destinations (Haarhoff, 2013).
Dilemma 4: Should Immigration Be Encouraged?
While the phenomenon of immigration exacerbates the effects of an ageing population in the society from which people emigrate, it has the effect of mitigating the problem in the society to which people immigrate. Not only are immigrants most often of working age but, in many cases, they are among the more educated of their respective populations. For example, prior to the recent Syrian refugee situation, about 40 per cent of all immigrants in Germany were college educated, compared to about 20 per cent of the total German population (Spiegel Online International, 2013).
In general, people have emigrated from developing to developed nations and some, if not most, developed nations have instituted policies to attract not only educated and skilled immigrants, but also entrepreneurs. And while these efforts may counteract the effects of an ageing population, there are conflicting goals that most immigration policy makers must take into account. One such goal is maintaining a haven for refugees. Another is keeping families together by giving priority to immigrants’ family members. Finally, there is the issue of the assimilation of immigrants. For example, several countries, Germany and France among them, have required immigrants to learn their respective languages. Similar proposals for an English requirement for immigrants to the USA have been made.
By contrast, encouraging the elderly to emigrate also shifts the nature of the population mix; the country that ‘exports’ its older citizens becomes ‘younger’. In a sense, the USA allows the elderly to emigrate and maybe even encourage it to a degree; it is possible to live in another country and still receive Social Security benefits, although not Medicare. Some countries, Belize for example, actively advertise to attract US retirees. Of course, while this may reduce the numbers of the elderly in the USA, it does not have the same economic effect as attracting younger, working-age immigrants. And, in the end, it negates the existence of any social support the elderly may receive from family and familiar community ties.
Challenges for Marketers
Most systems, including marketing ones, are not prepared for an ‘old culture’. As mentioned earlier, at the start of the twentieth century, the average life expectancy globally was 30; at the end of the century it was more than twice that (Williams & Krakauer, 2012). Over 10 years ago, The Economist (2002) noted that despite obvious ageing and the role of baby boomers in the economy, business remained largely obsessed with youth; it does not appear that much has changed since then. Carstensen and Fried (2012) noted that the world is still immersed in cultures for lives half as long as the ones people are living and stated that ‘not only are cultures youth-oriented in the popular sense of favoring the young, but physical and social environments and institutions are quite literally built by and for young people’ (p. 12). Milner et al. (2012) assert that 95 per cent of ads target those aged 35 or younger. They blame this on the youth of those in the advertising industry, stating that 95 per cent of those employed in the industry in the UK are under 50. The cultural shock of dealing with a very old consumer market in most of the world (with exceptions such as India, the Middle East and Sub-Saharan Africa) will require major adjustments.
Challenge 1: Different Products for the Elderly
A basic but critical issue facing marketers is to determine when to market directly to the elderly and when to market to third parties such as paid and unpaid caregivers and institutions. Schau et al.’s (2009) paper provides insights as to the young old, and Barnhart and Penaloza (2013) provide much insight into caregiver relationships. But the young old of the future will offer a new target market, the ‘elderly innovator’ (formerly an oxymoron). Given the role that baby boomers have played in economies globally, there will be much attention paid to the young old in terms of new product development. Traditional outlets for the elderly (drug stores and home health care equipment stores) will most likely not want to stock new products until demand has been firmly established. For the old elderly, many new products will no doubt benefit caregivers (by reducing anxiety) rather than the elderly themselves. Consider WanderGuard, a system sold to nursing homes that puts a bracelet on patients’ wrists so that an alarm sounds should they try to leave the facility. Given the issues faced with Alzheimer patients wandering, this system is far more humane than the alternative of strapping patients to chairs and is no doubt much appreciated by the patients’ loved ones.
A change is needed in terms of corporate culture in new product development. Given the relatively young age of the IT and engineering employees in the area, a focus on products for youth is understandable. However, the number of the elderly will create markets that have never received much attention, and visionary CEOs will need to shift the orientations of their employees.
Challenge 2: Communicating with the Elderly
Portrayals of the elderly need to be more honest. Years ago they were quite negative, but in recent years the portrayals seen by old people are far more positive (Lamb & Gentry, 2013). Whether those positive portrayals are also seen by younger target markets is questionable, but they should be. Japanese advertising has become more sensitive to the self-esteem of the elderly. It is projected that more elderly diapers will be sold there in 2020 than baby ones. Thus, carefully positioning such potentially embarrassing offerings is necessary. The US car industry has made some miscues in dealing with the elderly; consider Buick promoting one of its models as being the ‘last car you will ever need’. Or, consider Oldsmobile, which was well positioned in the elderly market but got greedy with its ‘It’s not your father’s Oldsmobile’. Those fathers quit buying them and now the brand is gone.
While we have Betty White, Jessica Fletcher and Miss Marple as very visible heroines, elderly women are less likely to appear in advertisements than men according to content analyses (Lamb & Gentry, 2013). Marketers would appear to be missing the ‘old’ boat. By contrast, there are also criticisms that current portrayals of the elderly are too positive, reinforcing natural tendencies of ageing individuals to experience age denial (Lamb & Gentry, 2013). Extreme examples are products and services designed to improve one’s physical appearance so that the elderly can try to look as young as they wish to feel.
Challenge 3: Adjusting to Differences in the Behaviour of the Elderly
Given that the USA and Canada are younger than Japan and Europe, we have the advantage of watching marketers elsewhere adjust positionings for the growing elderly market. We already read that Japanese department stores have increased font size in their signage, hired older sales clerks, lowered shelves for easier access, provided seating in stores for those not actively shopping but there with someone who is and assured that the offerings in the food courts have many traditional, non-exotic options (The Economist, 2013a). It has been a wise marketer who pays attention to global markets, but such awareness is going to be extremely worthwhile as other cultures become very old before those of the USA, Canada and India do.
While personal consumption may diminish, purchasing for others often increases, especially for grandchildren and great-grandchildren. The huge generational gap between the elderly and their youngest relatives does not diminish their desire to provide meaningful gifts. Unfortunately for the elderly, their understanding of children’s lifestyles and their ability to physically shop for gifts fitting those lifestyles does diminish with age. Marketers can greatly facilitate the process of purchasing meaningful, memorable gifts for young relatives, allowing them to avoid giving more crass gifts such as money or gift cards.
Challenges for Marketing Scholars
Like marketers, marketing scholars have tended to focus on their research efforts on non-elderly and non-poor consumers, ‘mainstream’ products and, to a certain extent, goods rather than services. This section discusses some of the exceptions to these generalizations and challenges to those scholars who would participate in what we believe is the coming importance of issues associated with an ageing world. While it would be presumptive to suggest specific research topics, we hope to outline some of the basic issues that could and should be addressed.
Challenge 1: Appropriate Definitions and Measures
George Moschis was the first in the US marketing academe to build a stream of research on older consumers; his operationalizations often were such that those as young as 50 were considered elderly. There is probably no way to ever settle on a particular age, in years, as the starting point of ‘elderly’, but increasing life spans strongly suggest that the all too frequent use of the catch-all ‘65 and over’ category on most questionnaires is working against our understanding of many issues involving the elderly.
In spite of the fine and useful research stream that exists around the term ‘QOL’, further attention to definitions of this term is warranted. Escuder-Mollon’s (2013) overview of QOL research across disciplines notes that the phrase is associated with constructs such as life satisfaction, well-being, a good life, being healthy, being happy or having plenty of money (and, the associations of the last construct [money] with the other constructs generally have been found to be weak, once there is enough to cover a basic level of needs).
Escuder-Mollon (2013) notes that there are two general types of measurement approaches: using subjective measures and or using objective measures, and further observes that recent research has emphasized subjective measures more. Subjective measures allow the investigation of what individuals themselves see as contributing to their well-being, as opposed to having someone else (the researcher or government officials) decide what is important in terms of making one happy. The strength of this general approach is that, as noted above, there are many public policy issues that affect the QOL of the elderly and knowing how people respond to particular policies is important. On the other hand, the use of subjective measures with elderly respondents has limitations such as getting responses from the old and the commonly observed limited scope of the studies, especially from a geographical perspective. The broad, multidimensional nature of this framework is appealing and is quite consistent with most measures discussed in the macromarketing literature whether using objective measures (Hill & Dhanda, 1999; Martin & Hill, 2012) or subjective measures (Farquhar, 1995; Gabriel & Bowling, 2004; Hall, 1976; Peterson, 2006).
Much of the empirical work in macromarketing has relied on objective measures, in part because of the desire to have a global scope (Hill & Dhanda, 1999). In fact, Sirgy and Samli (1995) listed the development of measures of QOL as one of the most common topics in QOL research in macromarketing. These objective measures need large secondary data bases in order to conduct investigations, and researchers are limited in terms of the variables available to use. Apparently gender data are available, as Hill and Dhanda (1999) investigated differences in the quality of lives of the two sexes using the UN’s Human Development Index with its three basic dimensions (longevity [life expectancy], knowledge [literacy rates and school enrolment levels] and standard of living [real gross GDP per capita]). Although the majority of the elderly globally are female, the only mention of age was in the paper’s last sentence calling for needed research.
Challenge 2: Health Issues
In marketing, while there is lip service to health, much more emphasis is placed on consumer well-being and the nature of the interactions with the marketplace. So, while the marketing literature on QOL is extensive, there are relatively few pieces focusing on health concerns (with exceptions such as Brennan, Eagle & Rice, 2010; Meadow & Sirgy, 2008; Rahtz & Szykman, 2008). Yet, when one considers the elderly context, health care costs are increasing rapidly whereas consumption in other domains is decreasing. Understanding the causes and, especially, the effects of this phenomenon on the well-being of the elderly and on the society is essential.
Challenge 3: Financially Restricted Consumers
The mainstream marketing discipline has not dealt systematically with issues facing financially restricted consumers. Hill and Martin (2014) note that only one article in the Journal of Marketing in the last 35 years has dealt with impoverished people and their consumption. Furthermore, they note that the marketing discipline as a whole has focused on the top 15 per cent of the world (in economic terms) and disregarded the vast majority of the world’s inhabitants. There have been exceptions, going back to the ‘poor pay more’ trickle in the 1960s. Among the richer pieces dealing with the poor or the bottom of the pyramid (when a global perspective is taken) include Ger and Belk (1996), Hill (1991, 2002, 2008), Hill and Martin (2014), Hill and Rapp (2009), Hill and Stamey (1990) and Martin and Hill (2012). Insightful as this work and numerous others are in terms of poverty issues, there has been virtually no coverage in consumer research of the elderly poor in any of them. There are countries where the ‘old may have more’ (in a few cases more than the average citizen and, more commonly, than households with children), but in most countries we see a disproportionate percentage of the elderly below the poverty line.
Challenge 4: Family Issues
Family is a topic central to ageing, as most of the world has a history of the elderly being taken care of by family. As discussed earlier in the article, the fraying of family ties is likely to create serious threats to the QOL of the elderly globally. While family is a topic investigated within a large number of disciplines, including marketing, there are many ‘holes’. Consumer research has been faulted (Commuri & Gentry, 2000) for its focus on ‘happy families’, given the nature of the sample recruiting processes used to generate participants (from church groups and parent–teacher organizations). There has been relatively little consumer research covering purchasing in more dysfunctional families and even less in elderly households. Within consumer research, Webster and Rice (1996) found that, upon retirement, a shift in power favouring women occurs but only in cases where the incomes of the couples were significantly unequal before retirement. On the other hand, in sociology, Gottman (1979) observed the phenomenon of a ‘gender switch’ occurring in later life, which he explained as a decline in gender differences. Casual observation at any US supermarket would find many elderly male shoppers.
Challenge 5: The ‘Taboo Topic’—Mortality
Given that death is a topic which marketing (and Western society in general) regards as a taboo topic for conversation (Gentry, Kennedy, Paul & Hill, 1995a, 1995b), marketing scholars have provided little insight as to how to improve one’s QOL at the near-death stage. Marketers might investigate how they can facilitate ‘death with dignity’. This point has been raised previously by Brennan et al. (2010), Layton and Grossbart (2006) and Lee and Sirgy (2004), but there has been little evidence that it took root.
Finally, as noted earlier, ageing ends in death, which has received almost no attention in the marketing literature. Just as it is hoped that Barnhart and Penaloza’s (2013) article stimulates much future research on the elderly, we hope that the book Death in a Consumer Culture edited by Susan Dobscha (2015) will help reduce the ‘death avoidance’ perspective held by marketers outside the funeral industry. Death is largely seen by the medical industry as a failure, which can at times be a barrier to death with dignity. Hospice will hopefully be a growth industry and will share their expertise in the context of death with dignity with others. Marketers are not lacking when it comes to creativity, but creatives have not focused on dying. Offerings such as the reef balls housing the remains of consumers that the firm Eternal Reefs then places on the ocean floor to mimic reef formations give purpose to those elderly concerned with sustainability (Baker, Baker & Gentry, 2015). For instance, one of Baker’s et al. (2015) informants who had pre-planned the reef ball experience found it to provide a bit of immortality, as her body will be used to build up life and make an impact even after she is gone.
Another example of how this desire for immortality can be dealt with is the ‘grandparent’ life insurance policy offered by WoodmenLife Insurance. When the grandparent passes, money is not transferred to the grandchild at that time, but rather at momentous times in the life of the grandchild such as a wedding or a college graduation. The grandparent would have loved being present in person at such times, but the presence will be felt with the money transfer coming from the insurance policy. Such an offering allows the dying individual to feel better about his/her legacy.
Conclusions
The world—developed and developing nations—is ageing; their populations contain an increasing proportion of older people. The decline of the family and close community ties are converting the question of the QOL of the elderly into issues seeking answers in public policy and the marketplace. Marketing needs to wake up and acknowledge the ageing of the globe. We have largely ignored elderly markets for some time, and that has to change. Are we prepared?