?url_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Adc&rft.relation=https%3A%2F%2Fpure.iiasa.ac.at%2Fid%2Feprint%2F4214%2F&rft.title=Aging+Populations+and+Social+Challenges.+Paper+presented+on+IIASA's+20th+Anniversary&rft.creator=Praag%2C+B.M.S.+van&rft.creator=Dalen%2C+H.+van&rft.creator=Lutz%2C+W.&rft.description=IIASA+celebrated+its+twentieth+anniversary+on+May+12-13+with+its+fourth+general+conference%2C+IIASA+'92%3A+An+International+Conference+on+the+Challenges+to+Systems+Analysis+in+the+Nineties+and+Beyond.+The+conference+focused+on+the+relations+between+environment+and+development+and+on+studies+that+integrate+the+methods+and+findings+of+several+disciplines.+The+role+of+systems+analysis%2C+a+method+especially+suited+to+taking+account+of+the+linkages+between+phenomena+and+of+the+hierarchical+organization+of+the+natural+and+social+world%2C+was+also+assessed%2C+taking+account+of+the+implications+this+has+for+IIASA's+research+approach+and+activities.+%0A%0AThis+paper+is+one+of+six+IIASA+Collaborative+Papers+published+as+part+of+the+report+on+the+conference%2C+an+earlier+instalment+of+which+was+Science+and+Sustainability%2C+published+in+1992.+%0A%0AIf+there+is+anyone+who+writes+with+authority+on+pensions+and+the+problems+that+all+industrial+countries+will+confront+in+at+most+the+next+20+years+it+is+Professor+van+Praag.+He+has+been+far+ahead+of+his+time+in+pointing+out+the+fatal+defect+hidden+in+the+present+arrangement+of+social+security.+It+was+introduced+and+is+now+maintained+and+defended+less+from+the+viewpoint+of+long-term+workability+than+for+its+short+term+convenience.+%0A%0AThe+system+I+refer+to+is+called+Pay+As+You+Go+(PAYG)%2C+wherein+no+reserve+is+maintained%3B+each+year's+tax+collections+(necessarily+from+those+working)+are+paid+out+that+same+year+to+those+retired.+The+convenience+of+PAYG+was+that+as+soon+as+announced+it+could+start+to+pay+retirees+almost+irrespective+of+the+amounts+they+had+contributed.+It+necessarily+reduces+saving+in+the+economy%2C+turns+one+generation+against+the+preceding+generation%2C+and+has+other+incidental+ill-effects%2C+but+these+are+not+what+concern+van+Praag+and+Dalen+most.+%0A%0AWhat+they+fear+is+its+instability+in+the+face+of+demographic+fluctuations%2C+specifically+the+day+when+the+postwar+baby+boom+starts+to+retire.+Subsequent+to+the+baby+boom+of+the+1950s+birth+rates+went+down+and+stayed+down%2C+so+that+the+cohorts+to+pay+the+pensions+will+be+relatively+small%2C+just+as+the+cohorts+coming+to+collect+them+will+attain+record+size.+Beyond+that+fact%2C+caused+by+the+changing+birth+rate%2C+is+the+decline+in+mortality%2C+the+increased+fraction+of+each+cohort+living+to+extreme+old+age.+What+happens+when+these+facts+require+that+payroll+taxes+go+up+to+the+25+percent+of+all+wages+that+will+ultimately+be+necessary+if+the+retired+are+to+have+social+security+incomes+equal+to+80+percent+of+the+average+wage%3F+%0A%0APAYG+depends+on+each+generation+as+it+makes+its+payments+trusting+that+the+next+generation+will+continue+do+the+same%3B+once+doubt+starts+to+spread+the+fragility+of+the+whole+system+is+revealed.+We+are+told+that+the+system+is+supported+by+a+%22contract+between+the+generations%22+but+the+%22contract%22+is+metaphorical%2C+as+will+be+revealed+in+a+few+years+when+the+crunch+comes.+%0A%0AEffects+go+beyond+the+social+security+system%3B+they+create+a+wholly+artificial+and+unnecessary+conflict+between+the+generations.+With+PAYG+a+shortsighted+younger+generation+can+become+alarmed+at+what+is+ultimately+good+news+for+all+-+the+rapidly+growing+number+of+octogenarians+and+people+even+older+-+and+be+tempted+to+vote+against+further+use+of+their+taxes+for+research+into+and+therapy+of+the+chronic+diseases+of+old+age.+%0A%0ABut+you+do+not+require+my+explanation+of+the+problem+of+PAYG.+You+not+only+have+it+better+expressed+by+van+Praag+and+Dalen%2C+but+they+provide+a+remedy%2C+one+that+will+be+the+more+painless+the+sooner+it+is+initiated.&rft.publisher=CP-94-007&rft.date=1994-04&rft.type=Monograph&rft.type=NonPeerReviewed&rft.format=text&rft.language=en&rft.identifier=https%3A%2F%2Fpure.iiasa.ac.at%2Fid%2Feprint%2F4214%2F1%2FCP-94-007.pdf&rft.identifier=++Praag%2C+B.M.S.+van%2C+Dalen%2C+H.+van%2C+%26+Lutz%2C+W.+%3Chttps%3A%2F%2Fpure.iiasa.ac.at%2Fview%2Fiiasa%2F190.html%3E+ORCID%3A+https%3A%2F%2Forcid.org%2F0000-0001-7975-8145+%3Chttps%3A%2F%2Forcid.org%2F0000-0001-7975-8145%3E++(1994).++Aging+Populations+and+Social+Challenges.+Paper+presented+on+IIASA's+20th+Anniversary.+++IIASA+Collaborative+Paper.+IIASA%2C+Laxenburg%2C+Austria%3A+CP-94-007+++++