In Dutch society, a situation of ‘double societal aging’ exists: an increasing proportion of the population is becoming retired, whilst average life expectancy is increasing. This can lead to an undesirable situation for public finances, because health care costs and the government’s contribution to AOW (the Dutch general seniority law, Algemene Ouderdoms Wet) as a proportion of gross domestic product (GDP) could further increase.
The challenges posed by an aging population are highly complex and surrounded by deep uncertainties, such as developments in labor productivity and the thereto linked GDP, life expectancy, the proportion of the population that lives unhealthily, and the health care demand of older people. The result of this is a wide array of future scenarios for the financial sustainability of the Dutch social model.
The methodology Exploratory System Dynamics Modeling and Analysis (ESDMA) generates thousands of plausible scenarios in order to explore the uncertain effects of complex future issues. Within these scenarios, undesirable situations and their causes are identified. Then, policies that can mitigate these undesirable situations are tested for their robustness across the range of uncertainties, i.e. over all of the scenarios.