Transcript NTA indicators we are thinking about using in the wall

Two NTA indicators
we are thinking about using in the
wall chart for
Latin America and the Caribbean
Tim Miller
NTA Working Group on Indicators
June 8, 2010
Honolulu, Hawaii
First Indicator:
Intergenerational Tax Rate
Question:
• How large a tax would be needed
to finance these periods of
dependency?
Answer:
The Intergenerational Tax Rate
=
Aggregate LCD for Youth and
Elderly / GDP
The artist formerly known as
Prince
Why is this indicator called the Intergenerational Tax
Rate? Why not call it by its proper definition, the
Aggregate Life Cycle Deficit of Youth and Elderly
divided by GDP?
Second Indicator:
Benefit Generosity Rate
Question:
• What is the annual cost of educating
the average child? in Brazil? in the
United States? in Burkino Faso?
• How does the average cost of
educating a child compare to the
average costs of providing financial
support to elderly?
Answer:
The Benefit Generosity Ratio
=
Average Education, Health,
or Pension Benefit
as a share of
GDP/working-age adult
Expenditures/GDP can be expressed as
product of demography and policy.
DEMOGRAPHIC DEPENDENCY
RATIO FOR EDUCATION,
HEALTH, AND PENSIONS
Population at-risk
(e.g., school-age population)
÷
Working-age Population
BENEFIT
GENEROSITY RATIO FOR
EDUCATION, HEALTH, AND
PENSIONS
Benefits per person
÷
GDP per working-age person
B/GDP = bgr * P(6-21)/P(20-64)
• B = Aggregate educational expenditures.
• bgr = average benefit per school-age person
relative to economic output per working-age
adult = B/P(6-21) / GDP/P(20-64).
• P(6-21) = School-age population (ages 6 to
21).
• P(20-64) = Working-age population.
Two nice features
• International comparisons of 3 programs:
education, health, and pensions.
• Good for projections: we can project the
demography easily and can tell interesting
stories about policy through the BGRs.
THE ELDERLY POPULATION AND
PUBLIC PENSION SPENDING PER OLDER ADULT
Mahalo