Book Review - Financial Gerontology

Book Review
Financial Gerontology*ⅰ

Hiroki Nakatani
Project Professor, Keio University Global Research Institute (KGRI)

Financial Gerontology is an unfamiliar discipline. According to the American Institute of Financial Gerontology∗ⅱ , which was established in 1988, "financial gerontology is multidisciplinary, building on relevant teachings from biology, psychology, sociology and demography to understand the lifelong wealth span issues and aspirations of aging individuals and their families". Why did we publish this book? We have very good reasons to study this topic and share our output with Japanese researchers and practitioners in the financial sectors in Japan. Asia is aging rapidly. Japan is the front-runner in population aging and is facing various challenges as a consequence of the unprecedented demographic changes that humanity has never experienced in the past. Already, more than a quarter of the Japanese population is aged over 65 and the ratio is expected to grow and finally reach as high as 40 % in the latter half of the century.

∗ⅰKinyu-Jerontorogy (in Japanese) edited by Atsushi Seike, published by Toyo Keizai Shinpo Publishing Company, Tokyo, April 2017, ISBN 978-4-492-73342-4

∗ⅱAIFG (American Institute of Financial Gerontology): http://www.aifg.org/fingero.cfm

More alarmingly, the population aged over 75 is growing drastically and the ratio of those aged 65-74 to those aged over 75 will increase from 1:0.94 in 2015 to 1:1.47 in 2025 and finally 1:2.07 in 2060. There is no single big event to suggest such trend in our daily life, but slowly one sees visible signs. For example, it is not uncommon to see disoriented seniors in big shopping malls and to see colleagues leaving jobs to look after aging parents. Hence, securing healthy longevity has become the common concern for all of us. Ironically, this issue can be a consequence of expansion of longevity. The life expectancy of Japanese women was 61.5 years in 1950 and 86.99 in 2015. For Japanese men, the corresponding figures were 58.0 and 80.75 years. Therefore, Japanese women live 25.5 years longer and men 22.75 years longer in the last 65 years. However, these expansions do not necessarily result in happy and healthy later life. Compared to the respective life expectancy, the healthy life expectancy (defined as "years of independent living") is shorter by 9 years for men and 12.4 years for women in 2013. There is a huge gap between physical life expectancy and healthy life expectancy. In either case, life after retirement is growing, which places greater demand for resources to support the living of seniors. This results in issues of sustainability of social security such as pension and health insurance at country level and personal financing to supplement the pension at individual level.

Here, we argue that balanced extension of life, healthy life, and personal and financial wellness matter to all of us and to the country. We felt that this fundamental question had to be pursued further beyond existing research domains. Through our discussions, we decided to further develop "financial gerontology" as a cross-cutting research domain combining gerontology that studies the ageing process and monetary economics that addresses the wealth of individuals and nations. The initial output of our attempts has been published in a book written in Japanese by a study group of the Keio University, Nomura Institute of Capital Markets Research and Nomura Securities, as illustrated in the nine well-coordinated chapters briefly outlined below.

Introductory Chapter: Prof. Atsushi Seike, President of the Keio University and Editor of this book gives an overview of the issues and introduces the structure of this book.

Chapter 1:

Designing Socio-economical System in the Super-aging Society. Professor Kohei Komamura and Professor Keiichiro Kobayashi, both from the Faculty of Economics of Keio University, present socio-economic challenges as a consequence of the super-aging society, including prospect of the pension system, impact of aging labor force, increase of individuals with cognitive decline who are unable to make rational decision, and their impact on the socio-economic system and the country's macro economy. Finally, the authors propose a framework of future policy discussion.

Chapter 2:

Decision Making of Seniors with Declined Cognitive Function. Professor Masaru Mimura of Department of Neuropsychiatry, Keio University Faculty of Medicine, discusses the definition of cognitive function in the context of financial management of individual asset including economic decision-making. The author then explains the methods of cognitive assessment, including distance assessment of senior clients at the financial transaction sites.

Chapter 3:

Social System Challenges in the Era of Declining Population. Professor Hiroaki Miyata of Department of Health Policy and Management, Keio University Faculty of Medicine, illustrates the future health and welfare services supported by emerging information and communication technology by introducing a platform called "Person-centered Open Platform for Well-being: PeOPLe) with six possible applications. The Ministry of Health in Japan has already published Japan Vision Healthcare 2035∗ⅲ , which calls for bold actions to promote health care under the tremendous challenges of aging and declining population. The author stresses that PeOPLe is critical to gain sustainability of the social system.

∗ⅲMinistry of Health, Labour and Welfare; Vision 2035,
http://www.mhlw.go.jp/seisakunitsuite/bunya/hokabunya/shakaihoshou/hokeniryou2035/future/en/

Chapter 4:

Technology to Support the Aging Society. Associate Professor Junichi Ushiba of Faculty of Science and Technology, Keio University, applies engineering to rehabilitation medicine, since stroke consumes significant nursing care resources and causes huge economic loss for the affected individuals and the society. The author not only develops wearable assistive gears but also an innovative approach to stimulate stroke patient's brain to encourage the unaffected part of the brain to move the paralyzed arm. He also discusses development strategies. The traditional bottom-up approach starts from identification of clinical challenges. The author proposes an alternative approach to start from strategic selection of priority target and level of achievement from economic and disease burden, and then design the optimal design process to alleviate physical challenges of stroke patients.

Chapter 5:

Work and Health in Aging Society. Professor Toru Takebayashi, Dean of the Graduate School of Health Management, Keio University, studies the relationship among social participation, work, and health. The author stresses the importance of harmonizing the ability to work (workability) and declining functional ability of senior citizens.

Chapter 6:

Declined Cognitive Function of Senior Citizens and Legal Challenges. Professor Yukiko Inubushi of Civil Law, Keio University Faculty of Law, starts with a few legal cases related to the power of self-decision of senior persons, and then explains the current systems of "adult guardianship" and "voluntary guardianship" as defined by the Japanese Civil Law. These systems have more than 15 years' history but their unitization remains rather limited. The author argues that it is due to procedural difficulty and insufficient support including lack of a pool of competent guardians.

Chapter 7:

Asset Management of Seniors. Ms. Akiko Nomura, Managing Director of Nomura Institute of Capital Markets Research, first presents Japanese statistics of ownership of assets. Sixty-five percent of savings and 76% of securities are in the hands of persons exceeding 60 years of age. Then, the author introduces guidelines of Japanese securities firms to protect seniors from inappropriate business. However, aged customers are growing in number and there is a great need to expand their "wealth span" to support many years of living after retirement. From the example of the more proactive approach to assist seniors with their assets in the United States, quality asset management may need to be expanded in Japan as well. In this context, financial gerontology has important role to play.

Chapter 8:

Ageing Challenges of Japan in the Context of Globalization. Professor Hiroki Nakatani of Keio University Global Research Institute, first looks at the general global trend of mortality. The world is getting healthier, and population aging is evident in all countries but at different speeds. Japan is the first runner, and this means that Japan serves as an experimental ground for drastic demographic change, aging, and population decline. This poses both challenge and opportunity. The Japanese health care and related technology are highly relevant to other countries, particularly the rapidly aging Asian countries. Hence, health care and nursing care industries may contribute to economic growth in Japan, which has been struggling for the past two decades.
These nine chapters have tried to illustrate the wide scope to be covered by "financial gerontology", the concept of which still needs further refinement. This book takes a different view of senior citizens, and advocates the need to advance studies to make fellow senior citizens happier, healthier and wealthier.

List of Contents

Introductory Chapter

• Unprecedented Aging
• Increasing health and nursing care costs
• Consequences of rapid increase of senior citizens with declined cognitive function
• Importance of healthy life expectancy
• Industrial Revolution 4.0 and super ageing society
• Structure of this book

Chapter 1. Designing Socio-economical System in the Super-aging Society.

• Arrival of super-aging society
• Impact of longevity on society
• Challenges of cognitive decline
• New socio-economics model in the super-aging society
• Ageing and economics; framework of agenda setting
• Ageing and deflation
• Development of new life cycle model
• Policy and practical issues for further discussion

Chapter 2. Decision Making of Seniors with Declined Cognitive Function.

• Decline of cognitive function by aging
• Definition of decision-making
• Appraisal of decision-making ability
• Distance assessment
• Proposal of appraisal on site and it challenges

Chapter 3. Social System Challenges in the Era of Declined Population.

• System changes required
• Development of the platform of ICT by placing citizens in the center
• Future realized by the Wellbeing Platform

Chapter 4. Technology to Support the Aging Society

• Evolution of technology
• Groups of technology supporting health and welfare services
• Roles of technology in nursing care challenges
• Treatment and supplementation of neurological function provided by new technology
• Vital points of development of medical technologies
• Development strategy for medical and welfare technology
• Challenges for practical application

Chapter 5. Work and Health in Aging Society

• Social participation, role, and health of seniors
• Health challenges and seniors' labor participation from demographic changes
• Aging and psycho-physical changes of seniors through life course approach
• Promotion of health towards labor participation in the aging society

Chapter 6. Declined Cognitive Function of Senior Citizens and Legal Challenges.

• Legal issues related to the decision-making ability of seniors
• Decline of cognitive function of seniors and use of adult guardianship
• Self-decision making of seniors and voluntary guardianship
• Challenges of adult guardianship

Chapter 7. Asset management of Seniors.

• Large portion of Japanese financial assets held by the seniors
• Challenges of protecting seniors at financial transactions
• Emerging issues related to the financial asset management in later life
• Evolution of financial services for the seniors in US
• Era of financial gerontology
• Call for financial gerontology in Japan

Chapter 8. Challenges of Aging in Japan in the Context of Globalization.

• Health of Japanese population in the mega trend of globalization
• Unpreceded challenges of Japan in social experiments
• Hope and opportunities for the future
• Building win-win relationship between Japan and the rest of the world