Social-security retirement benefits distort the saving decisions of workers who are rational enough to save for their future. Since the implicit rate of return in an unfunded social-security program is less than the marginal product of capital, the resulting decline in saving causes a welfare loss. The present paper examines the conditions under which the welfare loss can be reduced by replacing the current universal social-security program with a means-tested program that pays benefits only to those individuals with little or no other retirement income or assets. Copyright 1987 by University of Chicago Press.
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David M. Cutler & Louise Sheiner, 1994.
"Policy Options for Long-Term Care,"
NBER Chapters,
in: Studies in the Economics of Aging, pages 395-442
National Bureau of Economic Research, Inc.
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