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Speaker(s): Assia Billig (IAA Population Issues Working Group)
Inequality is unavoidable and may be natural in many places in society, however, there is a "tipping point" that if attained, the result may be detrimental to societal development. Evidence suggests that the inequality gap is generally increasing across the globe. From 1950 to 1980 the GDP growth rate for the bottom 99.9% of the world population outpaced the growth rate for the top .1% of population. However, since 1980, the growth rate for the top .1% has been nearly four times the rate of growth of the bottom 99.9. In addition, recent studies indicate the improvement in life expectancy for those at the high end of the socio-economic spectrum is outpacing increases in life expectancy for those at the low end of the scale.
Actuaries are routinely involved in the measurement of risk and the development of social programs and public and private solutions. Assumptions about inequality are embedded within models and designs that are integral to decisions about these policies, programs, and solutions. These activities provide actuaries with a unique vantage point. This paper explores inequality from an actuarial perspective. It provides an overview of issues that contribute to inequality, identifies trends, and explores practical solutions.
This paper focuses in particular on the role actuarial assumptions play in measuring the impact of inequality on global societies. Several case studies are presented that highlight specific aspects of inequality in particular countries.
After defining and reviewing the actuarial aspects of inequality and related trends, the paper identifies actuarial involvement in the design of real-world strategies that can be implemented to help reduce inequality gaps.