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What is wealth? And how it affects older people presentation to Opportunities of Ageing Conference Dr Ganesh Nana Chief Economist Business and Economic Research Ltd 10 April 2013 Opportunities of Ageing Conference – 100413 slide 1 Economics and wealth is all about liquidity swap rates house prices interest rates inflation leverage debt hedge funds ratings Opportunities of Ageing Conference – 100413 slide 2 Wealth is … whānau people skills & knowledge iwi land buildings businesses networks experience innovation technology machinery & equipment water liquidity swap rates house prices interest rates inflation leverage debt hedge funds ratings Opportunities of Ageing Conference – 100413 slide 3 … and economics is about … • how we (choose to) use resources (wealth) to * produce things we want, need, desire * look after, maintain, or replenish resources * improve and/or expand resources investment to replace consumer benefit investment to grow Opportunities of Ageing Conference – 100413 slide 4 Our choices in using wealth consumer goods and services resources or wealth for today investment to replace for tomorrow investment to grow Opportunities of Ageing Conference – 100413 slide 5 Wealth individual perspective • financial • health and physical • social participation • life experiences Opportunities of Ageing Conference – 100413 slide 6 Wealth accumulation as we age liquid financial wealth age Opportunities of Ageing Conference – 100413 slide 7 Wealth accumulation as we age illiquid financial wealth age Opportunities of Ageing Conference – 100413 slide 8 Wealth accumulation as we age health and physical wealth age Opportunities of Ageing Conference – 100413 slide 9 Wealth accumulation as we age social participation wealth age Opportunities of Ageing Conference – 100413 slide 10 Wealth accumulation as we age life experiences wealth age Opportunities of Ageing Conference – 100413 slide 11 Wealth accumulation as we age liquid financial health and physical wealth wealth life experiences wealth age age illiquid financial wealth social participation age wealth age age Opportunities of Ageing Conference – 100413 slide 12 Drivers of accumulation of wealth Opportunities of Ageing Conference – 100413 slide 13 Drivers of wealth liquid financial • income * education opportunities * employment opportunities * abilities • financial literacy * understanding * opportunities • luck Opportunities of Ageing Conference – 100413 slide 14 Drivers of wealth illiquid financial • spending behaviour • savings habits * home ownership options • family circumstances • financial literacy * understanding * opportunities • luck Opportunities of Ageing Conference – 100413 slide 15 Drivers of wealth health and physical • lifestyle and diet • family history / circumstances • housing situation * living conditions * physical environment • income • luck Opportunities of Ageing Conference – 100413 slide 16 Drivers of wealth social participation • family circumstances • social situation * isolated or connected? • status of wider networks * schools * business * community • income • luck Opportunities of Ageing Conference – 100413 slide 17 Drivers of wealth life experiences • family • networks * schools, business, community • passion and/or opportunity to explore • income • luck Opportunities of Ageing Conference – 100413 slide 18 Drivers of wealth ... and, finally ... • endowments * whakapapa * status or history * knowledge or understanding * financial Opportunities of Ageing Conference – 100413 slide 19 Or, is wealth … • collective * family * whānau * iwi • nation Opportunities of Ageing Conference – 100413 slide 20 Business investment 16 as % of GDP % 14 12 10 8 6 Dec 88 Dec 94 Dec 00 Dec 06 Dec 12 Opportunities of Ageing Conference – 100413 slide 28 Government investment 10 as % of GDP % 8 6 4 2 0 Dec 88 Dec 94 Dec 00 Dec 06 Dec 12 Opportunities of Ageing Conference – 100413 slide 29 Labour force participation rate 70 % 68 66 64 62 Dec 88 Dec 94 Dec 00 Dec 06 Dec 12 Opportunities of Ageing Conference – 100413 slide 30 Labour force participation rate – 60-65yos 75 % 65 55 45 35 25 Dec 88 Dec 94 Dec 00 Dec 06 Dec 12 Opportunities of Ageing Conference – 100413 slide 31 Labour force participation rate – 65+yos 24 % 18 12 6 0 Dec 88 Dec 94 Dec 00 Dec 06 Dec 12 Opportunities of Ageing Conference – 100413 slide 32 Govt education expenditure as % of GDP 8 % 6 4 2 1996 2000 2004 2008 2012 Opportunities of Ageing Conference – 100413 slide 33 Opportunities of ageing • to contribute to accumulation of wealth across all dimensions * life experiences * social participation * health and physical * financial * and collective • and so to improve (increase) resources available for nation to make its choices Opportunities of Ageing Conference – 100413 slide 34 NZ 2012 population females 90+ 85–89 80–84 75–79 70–74 65–69 60–64 55–59 50–54 45–49 40–44 35–39 30–34 25–29 20–24 15–19 10–14 5–9 Under 5 18 31 males 8 19 47 58 37 50 79 72 97 92 121 134 156 163 164 148 143 149 159 152 142 141 152 200 150 116 128 147 152 149 135 134 149 171 161 148 148 161 100 50 0 50 100 150 man drought but the next 25 yrs ??? 200 000s Opportunities of Ageing Conference – 100413 slide 35