The Missing Billions
New report from the ILC estimates cost of failing to adapt to demographic change
This report was issued by the ILC (International Longevity Centre) in December 2016 and was presented to MMA members this week by the authors, Cesira Urzi Brancati and David Sinclair.
Older people are increasingly important consumers – a large and growing group of consumers, in absolute and relative terms. The report points out – as we at the Mature Marketing Association have been saying for some years – that the over 50s account for 35% of the population and 43% of total household spending on consumption. On this basis, the over 50s account for disproportionately high levels of expenditure, outspending other age groups.
However, the report also argues something rather significant. This is that households headed by someone aged over 50 account for 55% of the total number of households – presumably, because some of the households headed by people over 50 also include people aged below 50. On this basis, it is argued, older households spend less than their younger counterparts. In fact, the ILC state, household expenditure (on food, grocery, eating out, clothing and leisure) declines by approximately one per cent for each year beyond the age of 55.
Of course, the over 50s continue to be increasingly important in economic terms. With an ageing population, aggregate expenditure will continue to increase, even if individual household expenditure shows a slight decline with age. Furthermore, as we also know that the over 50s account for a disproportionately high amount of wealth, there is an apparent opportunity to increase their levels of expenditure.
Why does economic and social participation decline?
As we have known for some time, economic and social participation decline with age and this report confirms that we don’t 'go out' as much (eating out, cinema, cultural activities and so on) as we get older. If we go out less, we spend less. The question is: why?
The ILC report argues that financial constraints are not a barrier. In fact, decreased expenditure is not related to income levels. One can hypothesise about other factors in reduced expenditure – a less materialistic mindset, increased satisfaction with ones lot, or canny saving for an uncertain future, say – but this is just conjecture.
Two main barriers to social activity and consumer expenditure by older adults were identified. The first is that of poor health and in particular, walking difficulties – associated with 14.5% less spending on average, finds the report. The second barrier is accessibility, in the sense of living in a rural area, lack of access to a car and low levels of internet access.
The report identifies the importance of consumer spending to the economy and estimates the potential increases in spending if these barriers could be overcome. For example, the amount of lost spend due to walking difficulties is estimated at between £470million and £3.84billion. It is argued that this makes it worthwhile for businesses – and Government - to consider age friendly changes in the built environment, such as improved seating. Indeed, Anchor - England's largest not-for-profit provider of housing and care for older people – who were involved in this research - have launched a campaign called ‘Standing up for sitting down’.
There is a well-established argument that the failure to address the physical limitations of older consumers – which may include sight, hearing, cognitive and strength issues, among others – is a significant barrier to consumption. This report adds further weight to that argument and is to be applauded for that reason.