Freitag, August 21, 2009

Yet Another Unintended Consequences...

Today's FAZ, on page 7, had an interesting small article that you can read here (only in German).

Fundamentally, the Brazilian system of public pensions is facing a significant crisis, one that is going to bankrupt it.

Basically, it's this: widows are not expected to live, at an average, of 15 years after their husbands die, but rather 35 years.

But it's not that Brazilian widows, all of a sudden, have extremely long lives. It's much more that 70% of all men over the age of 65 now marry women that are, on an average, 30 years younger than they are. In other words, men 65+ years of age are marrying women in their mid-to-late 30s.

However, only 30% of the widows remarry. The reason? Most of the men in their age cohort have married younger women, given that women in their age cohort have been marrying older men. Hence: increasing numbers of relatively young women who are widowed but do not remarry, instead living off of the pension of their late husbands. For more than twice as long as was originally expected...

How did this come about?

Obviously, this is a new development (otherwise the empirical average of 15 years of widowhood wouldn't have formed the basis for the public pension calculations).

How did this then come about?

There's really a very simple explanation: Viagra.

Before Viagra, most older Brazilian men wouldn't even try to bed a younger woman, since impotence or other sexual ... failings would have been vastly too embarrassing to risk. With Viagra, no problem (Brazilian prostitutes apparently hate the stuff, since it means that the men are insatiable.

Hence the unintended consequence: the Brazilian public pension system is facing significant cost increases because of Viagra.

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