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Would a Privatized Social Security System Really Pay a Higher Rate of Return?

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Author Info

  • Geanakoplos, J.
  • Mitchell, O.S.
  • Zeldes, S.P.

Abstract

As the U.S. Social Security system has matured, the rate of return received by participants has fallen. In the coming years, around the time the Baby Boom generation retires, the system will experience a budget shortfall. Many advocates of reform suggest that an answer to this problem is to rivatize Social Security. Our goal in this paper is to challenge the following popular argument: a)projected returns to Social Security are low relative to expected returns on stocks and bonds, and therefore b) everyone would receive higher returns and be better off if we moved to a privatized system where individuals could directly invest their contributions in sotcks and bonds.

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Bibliographic Info

Paper provided by Columbia - Graduate School of Business in its series Papers with number 98-03.

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Length: 32 pages
Date of creation: 1998
Date of revision:
Handle: RePEc:fth:colubu:98-03

Contact details of provider:
Postal: U.S.A.; COLUMBIA UNIVERSITY, GRADUATE SCHOOL OF BUSINESS, PAINE WEBBER , New York, NY 10027 U.S.A
Phone: (212) 854-5553
Web page: http://www.columbia.edu/cu/business/
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Related research

Keywords: SOCIAL SECURITY ; PRIVATIZATION ; PENSION FUNDS;

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References

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  1. John Geanakoplos & Olivia S. Mitchell & Stephen P. Zeldes, 1998. "Social Security Money's Worth," Cowles Foundation Discussion Papers 1193, Cowles Foundation for Research in Economics, Yale University.
  2. Olivia S. Mitchell & Flavio Ataliba Barreto, . "After Chile, What? Second-Round Social Security Reforms in Latin America," Pension Research Council Working Papers 97-4, Wharton School Pension Research Council, University of Pennsylvania.
  3. Feldstein, Martin & Liebman, Jeffrey B., 2002. "Social security," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 32, pages 2245-2324 Elsevier.
  4. Olivia S. Mitchell, 1998. "Social security reform in Latin America," Review, Federal Reserve Bank of St. Louis, issue Mar, pages 15-18.
  5. Martin Feldstein, 1997. "Transition to a Fully Funded Pension System: Five Economic Issues," NBER Working Papers 6149, National Bureau of Economic Research, Inc.
  6. Olivia S. Mitchell & Stephen P. Zeldes, 1996. "Social Security Privatization: A Structure for Analysis," NBER Working Papers 5512, National Bureau of Economic Research, Inc.
  7. Alan J. Auerbach & Jagadeesh Gokhale & Laurence J. Kotlikoff, 1994. "Generational Accounting: A Meaningful Way to Evaluate Fiscal Policy," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 73-94, Winter.
  8. Arthur B. Kennickell & Martha Starr-McCluer & Annika E. Sunden, 1997. "Family finances in the U.S.: recent evidence from the Survey of Consumer Finances," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Jan, pages 1-24.
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Citations

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Cited by:
  1. Bossi, Luca, 2008. "Intergenerational risk shifting through social security and bailout politics," Journal of Economic Dynamics and Control, Elsevier, vol. 32(7), pages 2240-2268, July.
  2. Nikola Altiparmakov, 2013. "Is There An Alternative To The Pay-As-You-Go Pension System In Serbia?," Economic Annals, Faculty of Economics, University of Belgrade, vol. 58(198), pages 89-114, July - Se.
  3. Binswanger, Johannes, 2007. "Risk management of pensions from the perspective of loss aversion," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 641-667, April.
  4. Attanasio Orazio P. & Gianluca Violante, 1999. "Global Demographic Trends and Social Security Reform," REVISTA DESARROLLO Y SOCIEDAD, UNIVERSIDAD DE LOS ANDES-CEDE.
  5. Arza, Camila, 2008. "The Limits of Pension Privatization: Lessons from Argentine Experience," World Development, Elsevier, vol. 36(12), pages 2696-2712, December.
  6. Kubicek, Jan, 2005. "Contribution rates to funded pension systems in the new member countries," Research in International Business and Finance, Elsevier, vol. 19(2), pages 266-280, June.
  7. Elder, Erick & Holland, Larry, 2000. "Social Security reform: the effect of investing in equities," Financial Services Review, Elsevier, vol. 9(1), pages 93-106, 00.

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