Scandinavian Working Papers in Economics

Arbetsrapport,
Institute for Futures Studies

No 2007:4: Predicaments in the futures of aging democracies

Thomas Lindh () and Urban Lundberg ()
Additional contact information
Thomas Lindh: Institute for Futures Studies, Postal: Box 591, SE-101 31 Stockholm, Sweden
Urban Lundberg: Institute for Futures Studies, Postal: Box 591, SE-101 31 Stockholm, Sweden

Abstract: Ageing societies need to supply support to an ever growing segment of elderly dependent population without compromising the future sustainability for the currently young or unborn population. Current tendencies to focus on policy solutions like automatic stabilisers and norm based pre-commitment strategies with decisions delegated to experts carry a high risk of political breakdown when future populations re-evaluates this with new information. Using the Swedish pension reform as a concrete example we show how the futurity problem associated with the current non-existence of the future population makes the political process prone to avoid bringing issues with very long horizons into the public debate. Alternative demographic scenarios for Sweden are used to illustrate how even very small variations in the assumptions of demographic projections lead to radically different future population structures. Hence, the majority preferences in a distant future cannot be foreseen. Adding to this the complex interactions with a changing environment of technology and nature time-consistent decision making at the far future horizon must be virtually impossible. Thus the sustainability of long-term social security systems require constitutional balances that provide for orderly and continual adaptation rather than once-for-all fixes that are likely to be rejected by future electorates.

Keywords: ageing; democracy; pensions

JEL-codes: J10

31 pages, March 2007

Price: 25 SEK

Note: ISSN: 1652-120X; ISBN 978-91-85619-02-3

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