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Commentary

The Economic Implications of an Older World

People are living longer, but will we live better? Michael Falk and Laurence Siegel debate the ramifications for global growth.

In late 2012, the CFA Institute's flagship publication, the Financial Analysts Journal, published a thought-provoking essay by the research director of the institute's research foundation, Laurence B. Siegel, titled "Fewer, Richer, Greener: The End of the Population Explosion and the Future for Investors" (November/December 2012). Siegel predicted that the world's population would level off and might even begin to decline within two generations (hence, "fewer"), that humanity as a whole would be wealthier ("richer"), and that these improvements in the human condition would provide the means to reverse the damage that industrialization has had on the physical environment and even improve it ("greener").

Siegel's optimistic predictions, however, are not without risks and challenges that must be faced if they are to pan out. While the size of the human population may be leveling off, its age composition is changing dramatically. We are becoming older, but not necessarily healthier. Michael Falk, CFA, a partner with the Focus Consulting Group and the chief investment strategist at Mauka Capital, has been studying global demographic trends and the implications for investors for many years, especially for those nearing retirement. He has lectured on this topic at meetings of CFA societies throughout the world.