Refusing to Retire: What Can Be Done When People Overstay Their Welcome?

Professor Becker and I are not youngsters. We are both past the normal retirement age--and neither of us is retired. Both of us have, in fact, lifetime tenure, though both of us can, in principle, be forced to retire if we become incapacitated. Most Americans, and we suppose most people the world over, want to retire, generally in their early sixties. But there are dramatic exceptions, including Popes, Supreme Court Justices, and dictators. The exceptions are becoming increasingly problematic with the extension of life brought about by modern medicine. If the only effect of medicine were to postpone incapacity, so that instead of becoming incapable of work at 70 one became incapable of work at 80, increased longevity would not pose a social problem, or at least the problem that concerns us here. The problem arises from the fact that medicine increases the average period in which a person remains alive despite physical or mental incapacity. Medicine does not merely increase length of life; it also increases length of sick life. We should distinguish physical from mental incapacity--but not too sharply. Physical incapacity often reduces the amount of a person's working time, and if the person has a demanding job, the effect on his output can be great; if he is a key person--such as a leader, or the occupant of a chair in a university department that has no additonal slots--the reduction in his output can greatly reduce the output of an entire organization; and the organization might be an entire nation. Mental incapacity is more dramatic and often more harmful; it may or may not reduce the amount of time that the afflicted individual works, but it may reduce the value of his entire output to zero. The problem would not be acute in a system of mandatory retirement at a fixed age, whether for judges, professors, or religious and political leaders, but the entire trend is against fixed retirement ages. This seems a mistake. It is premised on the correct observation that people decay at different ages, so that setting any age of mandatory retirement designed to make sure that people incapacitated by age are removed will remove some people who are not incapacitated. But that observation merely identifies one cost of mandatory retirement. The benefits must also be considered. They are in fact great, because of the cost of removing people on the basis of individualized determinations of incapacity. Not only are such determinations often difficult to make unless the individual has deteriorated to an extremely low level, but there is a justified concern that they may be used selectively, to remove political enemies or professional rivals. This is also a risk with mandatory retirement that allows exceptions for preferred individuals; hence the pressure to forbid such exceptions. I wish to make a suggestion that would achieve the principal benefits of mandatory retirement without the principal costs. It is simply this: beginning at age 70, require every life-tenured professor and every life-tenured judge to take a test of mental acuity every five years. (I use these simply as examples of "light" jobs from which the occupant is unlikely to be forced to retire by the demands that the job places on him.) The test results would be available to the members of the professor’s department or the judge’s court but to no others. The results would not be a basis for a determination of incapacity; they would not even be admissible in a competence hearing. The expectation rather is that a poor test result would persuade the individual, perhaps by persuading his colleagues who would in turn persuade him, or persuade members of his family to persuade him, to retire voluntarily. The design of such a test would of course be difficult. It could not be just an IQ test, because the abilities that enable a person to score high on such a test are not necessarily essential to competent performance in a given job, even an intellectual job. Older people, moreover, as Aristotle was the first to explain, can to an extent substitute experience for mental agility as a means of solving problems; and an IQ test is not a test of experience--it is supposed to abstract from experience. And experience is not only, or even primarily, knowledge; it is know-how, a trained intuition--qualities that may be inarticulable and therefore difficult to test for. But not impossible. The professor, or the judge, can be given a problem in his or her field and asked to indicate the solution--for the judge, the question might be: what is the correct decision in the following case? Or, for the professor of English, what is the meaning of this poem? The model is the driving tests that some states now require of elderly persons. Of course it is easier to test for basic driving skills than for the skills required in high professional positions, especially for the skills implied by such expression as the "wisdom of experience." Still, it should be possible to devise such a test as a collaborative project of experts in the field, psychologists, and educators. Few judges or professors would flunk. Rather, judges or professors who feared they might flunk would retire rather than take the test. The mere existence of the test would be a powerful signal to elderly people that, whatever their distinction, and even if they retain much of their acumen, they should be careful not to overstay their welcome. Although it would have been a shame had Justice Holmes been forced to retire from the Supreme Court at the age of 80, such examples (largely limited to judging, a distinctly geriatric profession) are greatly outnumbered by cases in which an elderly person delayed retirement too long. Then too at 80 Holmes could still have passed a judges' test. But the occasional false positive (pushing a person to retire when he is still highly competent) will rarely have any social significance because there will almost always be an equally competent younger candidate to replace him. I intend no disrespect in expressing doubt that the nine Justices of the Supreme Court are actually the nine most competent confirmable candidates for the nation’s highest court in a nation of almost a million lawyers and hundreds or even thousands of highly competent judges. And in the case of professors, retirement only stops their teaching; they can still do academic research and writing. Repealing the Age Discrimination in Employment Act would be a superior alternative to requiring tests of elderly professors, but is politically infeasible. And it would not deal with the problem of the elderly federal judges, because imposing a mandatory retirement age on them would require a constitutional amendment. Finally, I do not suggest that the test requirement that I have proposed be imposed by law on universities and judiciaries. The proposal is addressed to the institutions themselves, which could impose such a requirement by rule. It is not even clear that any sanction would be required for the rule to be obeyed. As long as some professors and judges took the test, those who did not would be suspected of fearing that they could not pass. This suspicion would induce those individuals either to take the test or to retire.

Comments

[Nathan Kaufman]

http://www.doubledoor.com/important.php

On a note not related the blog this week but related to timely law, economics, Chicago and activities: have any of you been to the Double Door? I guess Double Door is going to court this week and may not be around in the future. There is an on-line petition. It is kind of interesting.

[Jonathan Schwartz]

That's cute: Government regulation of the economy is law, law is efficient, therefore government regulation of the economy is efficient. If I don't believe that I should post on anti-Becker-Posner. Do you really think that Profs. Becker and Posner agree that government regulation of the economy is generally efficient??!!

As far as the property right holder getting to choose the outcome in the Coase Theorem, this will become a semantics argument but I stand by it. Coase Theorem predicts that economic forces will lead to the CHOICE of the efficient outcome but doesn't deny free will of choice.

I do agree that Posner's opinion is that the market is best left to decide how many older employees get hired but I think he is appealing more towards Walrasian Equilibrium rather than Coase.

Anyway, I guess this is all beside the point of whether old people should be protected against workplace discrimination.

[Lincoln]

A couple of brief comments.First,I was taught in history 101 the 65 year retirement age was established by Otto Von Bismarck to force a Prussian army chief of staff into retirement.Anyone know if this is true?
Secondly.I don't know enough about this to know if the law protects people from discimination based on a superior's evaluation of a lesser job performance or not.I certainly don't have the stamina I did 20 years ago,and couldn't work the hours I did.

[Andrew Leigh]

The Constitutional amendment may not be as politically difficult as you suppose. Australian voters have only passed 8/44 proposed referrenda, but the 1977 amendment setting a mandatory retiring age of 70 for justices on our highest court was passed with 80% in favor. US state legislatures might well take a similar view.

[Palooka]

First, the points on which I agree.

I agree with Becker that increased career length, for those capable and productive after traditional retirement, is something which should be encouraged.

I also agree with Posner that there is a particular problem in judges and professors, but I am puzzled why a post titled "Refusing to Retire: What Can Be Done When People Overstay Their Welcome?" only discusses a fraction of the population. I understand this is the population Posner finds himself most familiar, as he is both an academic and a judge, but why does the good judge recommend the "superior" system, that is a system with no age discrimination protection, when his examination of what the ADEA does is so inadequate? Does Posner mean that the ADEA should be repealed for professors only or for everybody based on his experience with professors and judges?

Posner wrote:

"Repealing the Age Discrimination in Employment Act would be a superior alternative to requiring tests of elderly professors, but is politically infeasible. And it would not deal with the problem of the elderly federal judges, because imposing a mandatory retirement age on them would require a constitutional amendment."

Becker wrote:

"The flexibility shown by the previous system is why I believe it is best to leave the determination of retirement ages to market forces rather than to the blunt instrument of legislation. Competition would create pressure for organizations to extend the employment of valuable employees who reached their "normal" retirement age. Actual ages of retirement did vary even among companies and other employers in the same industry, and certainly between industries and occupations. The system prior to the federal legislation on mandatory retirement was working well, and was adapting to the growing health and mental capacities of older persons. Posner agrees that it would be far better to eliminate this law than to introduce a competency test to evaluate whether professors and many others are capable of performing at a sufficiently high level."

There are two kinds of age discrimination which deserve distinction--discrimination post retirement age and discrimination pre retirement age. Both Becker and Posner seem most concerned with the ADEA when it comes to age discrimination post retirement (retirement being when eligible for SS benefits). I agree with their focus, but I am deeply troubled by the apparent endorsement of repealing the ADEA because of the problems associated with this particular group, those who continue to work past normal retirement age.

I believe the greater social concern rests with those who require employment even to subsist, but who are vulnerable in their 50s and 60s because of reduced productivity, increased medical coverage cost, etc. There is also the case of firing an individual to avoid the realization of pension benefits. Even though a firm's interests may be served by ridding their workforce of older workers, replacing them with cheaper, more efficient workers who are also cheaper to insure, there may be considerable governmental and social costs incurred as a result. It's entirely the total social cost is minimized, even though the firm's costs are not. It's also important to note that even assuming EQUAL productivity, it is in a firm's interest to discard their older workers because of the increased cost of insuring them. Do Becker and Posner suggest older workers who are equally productive have no protection because they cause a firm to incur increased costs?

The imperative of protecting the vulnerable, those workers who are without a social security "safety net," is of course not present in those workers who are eligible for social security benefits (currently those 62 or older, if I am correct). And in the case of the elite, the judges and the professors, I would not have a problem with mandatory retirement, even though some good professors and judges may be forced into retirement and society will not benefit from their considerable skill. But as Becker pointed out, for the exceptional case universities had found ways to keep productive faculty employed.

I realize the posts were addressing retirement, but both Becker and Posner (Posner more than Becker) seem to suggest that the whole of the ADEA should be repealed, not just mandatory retirement ages, so we could return to the "superior" system of old.

Corey: I read several of your comments, and I sympathesize with some of your sentiments. But I think you are wrong in your criticism that those here are advocating humans as "just a means to an end." The end is not something abstract, outside of human concern, as you imply. The end is the betterment of man through increased wealth and affluence. There is no better system in accomplishing that end than the capitalist system you so consistently rail against. I do agree, however, that in general on this blog, and in this discussion in particular, there has been a disturbing absence of concern for abstract human costs, though there is no reason those costs need be excluded from economic analysis or neglected on this forum.

[Dean Dad]

As a college dean, I'm astonished that the discussion of combining life tenure with the repeal of mandatory retirement never mentions salaries. In most of academia, esp. below the 'top' universities, salaries are determined mostly by seniority. My college has more full-time faculty over 65 than under 40, with backbreaking implications for our budget. I don't deny that many senior faculty are still perfectly competent at what they do; institutionally, though, if tenure were to expire at, say, 70 (like it did until 1994!), and we could replace people at the top of the salary scale with equally-capable entry-level folk, we could save a great deal of money. (Not to mention bring in new perspectives, help address the academic job shortage, etc.)

From two prominent scholars of law and economics, the absence of discussion of costs is simply inexplicable.

[Tyrr]

Hey anciano, thanks for the Bernard Russel name, I found some good books and listening material on him. W00t. :) I love listening to heady stuff.

DANKE DANKE DANKE!

[N.E.Hatfield]

For controlling retirement and quality of work; why not use a couple of purely market based techniques? Such as, salary and benefit arbitrage and annual zero based budgeting. This might also apply to the Fed. as well. At least the taxpayer might get a balanced budget for a change. ;)

I can hear the howls in Government and Academia now.

[Jack]

I don't see why the issue of competence and age needs to be linked and the solution imposed be an external test. As you noted, jobs that are not "light" don't have this problem, because incompetence is naturally weeded out through rigorous evaluations or transparency in performance.

In an era of increased elderly populations, which will be a burden on society, it seems to make sense to generally push the average working age up, not down. I dispute the concept that capable people in jobs are blocking progress for younger employees. Any employee that is creating economic value increases the net quantity of economic opportunity.

I think the solution is better performance evaluation processes for all age groups and systems that push the incompetent out regardless of age. Tenure and jobs for life are dated concepts and should be reconsidered in any case.

[John Kelsey]

Antiblog:

I don't think the distributive issue is anything like that clear. We don't want the worker starving in the streets or sleeping in a cardboard box, but there's no obvious reason he has to keep his current job and salary if he's not as productive as he used to be or as someone else would be, right? If a cardiac surgeon has to retire from surgery because he's just not as good at it now as the younger crop of doctors, we probably ought not to leave him eating his meals at a soup kitchen, but there's no inherent reason to keep him on a $300K/year salary, either.

Corey: I think you're in the mainstream in expressing the idea that workers aren't just means to an end. But not in the mainstream of behavior. Most people happily buy a cheaper product manufactured in China or Mexico rather than an equivalent-quality, more expensive one made in the US or Germany. That's treating the whole process of producing that product as a means to an end.

One concern I have about this discussion is that most of us discussing it are presumably pretty high-value employees. I assume that if I'm still able to be productive at 70, I'll still be able to find work. But things may look very different from the other end of the bell curve of ability or education or productivity. It's easy for most of us to just miss that, because we seldom come into direct contact with it.

--John

[N.E.Hatfield]

Why not use a couple of the market techniques currently in vogue, the use of salary and benefits arbitrage and zero based budgeting techniques. If applied rigorously and effectivley on an annual basis;it weeds out the weak, sloppy, and those who are not capable of maximum effort and in the end leaves a leaner, meaner and more competitive organization. Retirement requirements, age, experience, making room for youth, etc. etc. Has nothing to do with it. Simply effort and benefit.

Ahhh..., Social and Economic Darwinism, the solution to all our problems. Using these two techniques might even get the taxpayer a balanced budget and would certainly reduce the costs of education.

[TheWinfieldEffect]

JONATHAN: "That's cute: Government regulation of the economy is law, law is efficient, therefore government regulation of the economy is efficient."

It's also not what I said. I did not say "government regulation of the economy," which is an expansive and capacious defintion that implies a centrally planned economy and includes any and all government regulations in existence in the nation at a given point in time. I said "Government regulation is law," meaning that when an agency passes a rule under the proper procedural authority, that rule is validly enacted and has the positivistic status of law -- referring to a given rule. The difference between the two statements is the difference between one rule enacted by one agency to regulate one segment of one sector of the economy and THE ENTIRE CODE OF FEDERAL REGULATIONS.

A better reconstruction of my argument is not a syllogism, because aside from the obvious facts that I did not use those words or put them into syllogistic form, as a syllogism that transliteration would contain a fallacy -- applying the properties of the whole to each and every part (e.g., assuming a steering wheel weighs two tons because the car weighs two tons).
Here is a better reconstruction:

The law as a general body yields efficient outcomes;
a given agency rule is a law;
if, and only if, each and every law shares all the properties of law as a whole, then a given agency rule should be efficient

While you are free to contest that a given agency rule is efficient (i.e., that it shares all the properties of law as a whole), my point was that contesting that "law as a whole is efficient" is not engaging with Posner's argument (that "the ADEA is inefficient"). Indeed, it would be irrelevant.

JONATHAN: "As far as the property right holder getting to choose the outcome in the Coase Theorem, this will become a semantics argument but I stand by it. Coase Theorem predicts that economic forces will lead to the CHOICE of the efficient outcome but doesn't deny free will of choice."

This, of course, is totally different from what you said before. NOW you say "the choice of the efficient outcome," meaning that whatever is chosen will be efficient. Before you said "choose the outcome," which means Person X could choose an inefficient outcome. I never stated that the Coase Theorem and free will were mutually exlcusive, I simply noted that your description of it was false; thus your critique of my position was founded on a falsehood.

As to your "Walrasian" comment: The Coase Theorem suggests that voluntary contracts can solve externality problems where transaction costs are low. Once a Walrasian Equuilibrium is reached no one can be made better off. Well, gee, if you remove the ADEA because transaction costs are low and voluntary contracting will take its place (Coase Theorem), then once an equilibrium is reached where no one can be made better off, the equilibrium one reaches could be called Walrasian. That is not a critique or a rebuttal of the point I made: it is applying nomenclature to the point I made. You have only proved my point.

[TheWinfieldEffect]

Nice post, Palooka.

[extagen no]

Your test, if I read the article correctly, makes no mention of experience and wisdom that comes with age. Sure the younger maybe faster, have a higher IQ and more endurance but there is something to be said for experience.

I agree having a mandatory retirement age is stupid but if you are going to subject people to a test, you better make sure it is a well thought out test.

[Eric Rasmusen]

I like the idea of requiring a judge or professor with life tenure to take a test. But why release the results only to his colleagues? They already know he is getting senile. It is the public who (a) are in a position to do something about it (via impeachment or tenure-stripping proceedings) or to provide a new source of embarassment.

The test could be made standard and very simple, something similar to one of the drunk driving tests which require you to touch your nose or to walk in a straight line. Better yet, why not use the normal written part of the driving test? If a judge can no longer pass it, he shouldn't be judging. We could also make the judge take it annually, so progressive deterioration could be observed.

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