How the changing US demographics impact demand for retirement communities.

This AE is probably best for a principles of microeconomics course, but could be used in higher level courses as well. Students should understand determinants of demand. This is a relatively short AE and should be able to be completed in a single class period with time to spare. It is an independent AE and does not explicitly depend on other AEs.

Overview

The point of this AE is get students thinking about some shift factors of demand and relate that to some real world data about changing demographics in the U.S. It also requires them to understand and interpret data presented in a visual format. Students are presented with a graphic from the U.S. Census which shows how certain areas of the country are changing (average age in the population is getting younger or older). They are asked to predict the change in demand for retirement communities. They will need to identify the areas with more aging populations and relate that to the expected increase in demand for retirement communities.

Expected Student Learning Outcomes

- Demonstrate knowledge of shift factors of demand.
- Interpret data presented in a visual format.

Information Given to Students

Other things equal, an increase in the number of buyers for a product or service will increase demand for it. Different goods and services are most likely purchased by different segments of the population. The relative size of various populations in the United States have changed over time. Review the graphic below which shows how the median age of the population has changed in the United States from 2010-2017. Use this information to rank the following states (from lowest to highest), the predicted increase in demand for retirement communities. Be prepared to explain your answer.

A. California, Maine, North Dakota
B. California, North Dakota, Maine
C. North Dakota, Maine, California
D. North Dakota, California, Maine
E. Maine, California, North Dakota
F. Maine, North Dakota, California

Resources (article, video, etc.)
Refer to the following graphic to answer the question. (See uploaded file)

This graphic can be found at https://www.census.gov/library/visualizations/2018/comm/youngest-oldest-counties.html.

If students are not familiar with retirement communities, you might refer them to a website such as this one: https://www.agingcare.com/articles/defining-continuing-care-retirement-communities-104569.htm

Facilitation Guide

Prefatory remarks:
This exercise is designed to get students to think about determinants of demand and how they might change over time – in this case, how changes in the average age in a region might impact the demand for a good mostly consumed by older people. It is also used to help them understand data presented in a visual format, and use critical thinking skills to interpret it in a meaningful way.

Debriefing notes, including discussion questions:
Students should think about which demographics of the US population are likely to lead to greater demand for retirement communities. They should recognize that it is older populations that will likely be correlated with increased demand for retirement communities. They should be able to analyze the map and rank the given states based on their predicted changes in age demographics and connect this to the relative increases in the demand for retirement communities. Because we are not testing them on geography, states which are relatively easy to identify on the map are given. Also these three states have significant differences in the main colors shown on the map. A map with the names of the states could also be provided to make identifying the states easier. Other states could be selected to make the exercise more challenging. Instructors can modify this AE to attain the opposite ranking by focusing on a good that is preferred by younger people. Further extensions might be to have students consider the market implications of the rising demand for retirement communities. Specifically, who might benefit from this and how might they benefit? Who might lose? This might generate a separate question where students are asked to identify who is likely to benefit most from the demographic (age) change -- current homeowners? Owners of retirement communities? Construction companies? etc.

Closing remarks:
As a follow up exercise. students could be sent to the census website to determine answers to similar questions on their own.

This AE is best fit within a unit on supply & demand. Any assessments used for such topics would be effective here.