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Time-Inconsistent Preferences and Social Security

Author

Listed:
  • Ayşe İmrohoroğlu
  • Selahattin İmrohoroğlu
  • Douglas H. Joines

Abstract

In this paper we examine the role of social security in an economy populated by overlapping generations of individuals with time-inconsistent preferences who face mortality risk, individual income risk, and borrowing constraints. We find that unfunded social security lowers the capital stock, output, and consumption for consumers with time-consistent or time-inconsistent preferences. However, it may raise or lower welfare depending on the strength of time inconsistency.

Suggested Citation

  • Ayşe İmrohoroğlu & Selahattin İmrohoroğlu & Douglas H. Joines, 2003. "Time-Inconsistent Preferences and Social Security," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(2), pages 745-784.
    • Handle: RePEc:oup:qjecon:v:118:y:2003:i:2:p:745-784.
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    File URL: http://hdl.handle.net/10.1162/003355303321675509
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