Discuss possible economic implications of an ageing population (6 marks)

An ageing population refers to the increase in the average age of citizens, as citizens tend to live longer, and the subsequent increase in numbers of elderly people is not balanced by an increase in the birth rate and therefore in the number of younger people. This leads to an increase in the ratio of pensioners to the population of working age who are able to support them financially, otherwise known as the dependency ratio. This has varied impacts on society, both positive and negative.
For example, there will be an increase in the economic costs associated with elderly citizens, such as funding pensions, healthcare and social care costs. This may increase demand for government spending. Costs may also fall upon relatives or carers. Nonetheless, a rise in the elderly population can also have positive benefits. Economic sectors that may benefit include private healthcare, retirement housing, as well as leisure services and consumer goods that are aimed towards an elderly target market.
Other impacts may be more ambiguous and/or harder to attribute to an ageing population. For example, changing societal structure may affect political processes, as politicians in en electoral democracy are attracted to the 'grey vote'. This can be framed positively, as a way for issues that predominately affect the elderly to get onto the political agenda. However it may also occur to the detriment of the interest of other voter groups, and may be one factor in the rise of inter-generational tension, or cause issues that affect younger groups to be given less attention in comparison.