Freakonomics Radio - 75. Retirement Kills

Episode Date: May 16, 2012

Sure, we all dream of leaving the office forever. But what if it's bad for your health?

From APM, American Public Media, and WNYC, this is Freakonomics Radio on Marketplace. Here's the host of Marketplace, Kai Risdahl. Time now for a little Freakonomics Radio. It's that moment every couple of weeks where we talk to Stephen Dubner, the co-author of the books and the blog of the same name. It is the hidden side of everything. Dubner, welcome co-author of the books and the blog of the same name. It is The Hidden Side of Everything. Dubner, welcome back. Hey, Kai. Thank you.

Listen, I'm curious. Don't take this the wrong way, but you're not thinking of retiring anytime soon, are you? No. Do you know something I don't know? I do not. No, no, no. Since you're not, that puts you in good company. The Great Recession has put a lot of retirement plans on hold for a long time, often at the behest of governments who can't afford to pay pensions.

You know, Germany, the U.K., France, they've upped their retirement ages. And we're seeing a lot more older workers in the U.S. as well. Here's Lisa Boiley from the Bureau of Labor Statistics. OK. In 2000, 55 and older, that group was 13% of the labor force. In 2010, that group was 20% of the labor force. By 2020, our projections show that that group will represent 25% of the labor force. My gut tells me that my initial inclination on this is wrong. That's just people getting older, right? Isn't that the deal? Demographics are real. There are more older people, but people also are working longer.

So the share of workers over 65 in this country is the highest it's been in more than 50 years. And so we're going to have to work until not, you know, 60s, but mid-70s sometime, right? Well, look, it may sound terrible, but, Kai, I'm happy to say there is a hidden side, a little silver lining here to consider. OK, so the economist Joseph Zweimuller at the University of Zurich recently did a study that looked at two fairly identical groups of blue collar workers in Austria. One group that got early retirement up to three and a half years earlier than the other. And what Zweimuller found is that early retirement, as much as we may think we crave it, actually has a considerable downside. I mean, actually, what we find in our study is that among blue-collar workers, we see that workers who retire earlier have higher mortality rates, and these effects are

pretty large. Higher mortality rates, And these effects are pretty large. Higher mortality rates. They die, right? The people who took the early retirement? Correct. The study showed that for every extra year of early retirement, you lose about two months of life expectancy. And I should say, this is not the first study to show that there's a fairly strong relationship between early retirement and earlier death. What do we know, though, about the causes of death? I mean, you know, right? Is it heart attack? What is it? Yeah, a lot of them cardiovascular,

likely due to things like more smoking and drinking, worse diet, not enough exercise. But there's also evidence to show that it goes beyond the physical, that working longer is tied to better mental health as well, okay? Here's Mo Wang. He's a psychologist at the University of Florida

who studies retirement. Working actually gives you a way to structure your life. And that's very important. Usually, it's interesting. You see people travel right after they retire. But then after like one or two years, people just sit at home watching TV. So this raises a little bit of an existential quandary, right?

Life expectancy at birth in the U.S. has doubled over the past century. Miraculous, which means that we've gained more and more years potentially of retirement. But we're still figuring out what to do with all those years. So here's my Freakonomics friend and co-author Steve Levitt. As you know, he's an economist at the University of Chicago. So now we've created this artificial sort of absurdly long chunk of years for many people, 25 or 30 years, where you've got nothing to do, but the government essentially pays you to do nothing. And so I think retirement as we have today is crazy. Says the academic who sits around and thinks all day, right?

I mean, come on. And says the economist who wants to squeeze more productivity. He wants us to work longer and harder, right? Right. But here's the thing. It may be for our own good, right? If early retirement leads to worse health outcomes, you start to see the virtue of working longer. Now, of course, it all depends on how you define work. And if maybe you can kind of have your cake and eat it too,

that is exactly the way Steve Levitt, by the way, is planning his retirement. So my second career will be to aspire to be a professional golfer. So it's not something I'll ever actually attain, but I'm going to call my full-time golfing work. Nice work. If you can get it, Stephen Dubner, Freakonomics.com is the website.

We'll see you in a couple of weeks. Coming up on the podcast next week, the paradox of food, which is to say food today is cheaper, more abundant and often more delicious than ever. But it's not without its problems, junk food and obesity, to name just a couple. We'll talk about all that, including how American food got so bad before it got good. You'll hear from foodie economist Tyler Cowen, food writer and philosopher Michael Pollan, and chef of chefs Alice Waters. All next week on the podcast.