The Foster-Greer-Thorbecke approach applied to the measurement of population aging

We propose Foster-Greer-Thorbecke (FGT)-type measures of population aging that incorporate a single aging-risk aversion parameter, allowing policymakers and researchers to place greater emphasis on the aging-related risks faced by the oldest individuals in society. The proposed measures satisfy key normative properties, including additive decomposition—enabling disaggregation by population subgroups—and multiplicative decomposition, which reveals three main drivers of population aging: incidence, intensity, and inequality. The proposed measures also have built-in flexibility to incorporate the old-age dependency ratio, an essential indicator in the planning and delivery of aging-related services. We discuss the implications of the irreversibility of aging for the design of the associated long-term public policy and demonstrate the practical utility of the proposed measures using data from developed and developing economies. Finally, we introduce the three i’s of population aging (TIPA) curve, a novel graphical tool for visualizing and comparing population aging across subgroups and over time. Illustrative examples for Canada, Japan, Kenya, and Nigeria show the ability of the proposed measures to accurately capture differences among countries with different demographic structures as well as the impact of demographic shocks.