Advanced Search
MyIDEAS: Login to save this paper or follow this series

Discount Rate Heterogeneity and Social Security Reform

Contents:

Author Info

  • Andrew A. Samwick

Abstract

As many countries consider the privatization of existing pay-as-you-go Social Security systems, the option to make participation in the new system voluntary may appeal to policy makers who need to obtain the political support of their workers. A critical issue in evaluating such a reform and its economic consequences is the unobserved heterogeneity in households' preferences for consumption. This paper estimates the distribution of rates of time preference from the wealth data in the Survey of Consumer Finances 1992 and a flexible life-cycle model of consumption under income uncertainty. The estimated distribution is then applied to a variety of reform proposals that incorporate a voluntary choice of how much to contribute to a dedicated retirement account and a rebate of the existing payroll tax that increases with the magnitude of the contribution. The main finding is that an appropriate menu of reform plans can induce the voluntary buy out of 84 percent of existing payroll taxes at an immediate cost to national saving of less than 0.25 percentage point.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.nber.org/papers/w6219.pdf
Download Restriction: no

Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6219.

as in new window
Length:
Date of creation: Oct 1997
Date of revision:
Publication status: published as Journal of Development Economics, Vol. 57 (October 1998): 117-146.
Handle: RePEc:nbr:nberwo:6219

Note: AG PE
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Phone: 617-868-3900
Email:
Web page: http://www.nber.org
More information through EDIRC

Related research

Keywords:

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
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.:
as in new window
  1. Eric M. Engen & William G. Gale & John Karl Scholz, 1994. "Do Saving Incentives Work?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, Economic Studies Program, The Brookings Institution, vol. 25(1), pages 85-180.
  2. Peter Diamond, 2004. "Social Security," American Economic Review, American Economic Association, American Economic Association, vol. 94(1), pages 1-24, March.
  3. Miles S. Kimball, 1989. "Precautionary Saving in the Small and in the Large," NBER Working Papers, National Bureau of Economic Research, Inc 2848, National Bureau of Economic Research, Inc.
  4. Olivia S. Mitchell, 1996. "Administrative Costs in Public and Private Retirement Systems," NBER Working Papers, National Bureau of Economic Research, Inc 5734, National Bureau of Economic Research, Inc.
  5. Michael J. Boskin & Laurence J. Kotlikoff & Douglas J. Puffert & John B. Shoven, 1987. "Social Security: A Financial Appraisal Across and Within Generations," NBER Working Papers, National Bureau of Economic Research, Inc 1891, National Bureau of Economic Research, Inc.
  6. Martin Feldstein, 1995. "Would Privatizing Social Security Raise Economic Welfare?," NBER Working Papers, National Bureau of Economic Research, Inc 5281, National Bureau of Economic Research, Inc.
  7. Deaton, A., 1989. "Saving And Liquidity Constraints," Papers, Princeton, Woodrow Wilson School - Public and International Affairs 153, Princeton, Woodrow Wilson School - Public and International Affairs.
  8. Carroll, Christopher D. & Samwick, Andrew A., 1997. "The nature of precautionary wealth," Journal of Monetary Economics, Elsevier, Elsevier, vol. 40(1), pages 41-71, September.
  9. Martin Feldstein & Andrew Samwick, 1998. "The Transition Path in Privatizing Social Security," NBER Chapters, National Bureau of Economic Research, Inc, in: Privatizing Social Security, pages 215-264 National Bureau of Economic Research, Inc.
  10. R. Glenn Hubbard & Jonathan Skinner & Stephen P. Zeldes, 1993. "The Importance of Precautionary Motives in Explaining Individual and Aggregate Saving," NBER Working Papers, National Bureau of Economic Research, Inc 4516, National Bureau of Economic Research, Inc.
  11. Robert H. Topel & Michael P. Ward, 1988. "Job Mobility and the Careers of Young Men," NBER Working Papers, National Bureau of Economic Research, Inc 2649, National Bureau of Economic Research, Inc.
  12. Glenn R. Hubbard & Jonathan Skinner & Stephen P. Zeldes, . "Precautionary Saving and Social Insurance," Rodney L. White Center for Financial Research Working Papers, Wharton School Rodney L. White Center for Financial Research 3-95, Wharton School Rodney L. White Center for Financial Research.
  13. Disney, Richard & Whitehouse, Edward, 1993. "Contracting-Out and Lifetime Redistribution in the UK State Pension System," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, Department of Economics, University of Oxford, vol. 55(1), pages 25-41, February.
  14. Martin Feldstein & Andrew Samwick, 1997. "The Economics of Prefunding Social Security and Medicare Benefits," NBER Working Papers, National Bureau of Economic Research, Inc 6055, National Bureau of Economic Research, Inc.
  15. Richard Disney, 1995. "Occupational pension schemes: prospects and reforms in the UK," Fiscal Studies, Institute for Fiscal Studies, Institute for Fiscal Studies, vol. 16(3), pages 19-39, September.
  16. Christopher D. Carroll, 1992. "The Buffer-Stock Theory of Saving: Some Macroeconomic Evidence," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, Economic Studies Program, The Brookings Institution, vol. 23(2), pages 61-156.
  17. Christopher D. Carroll & Andrew A. Samwick, 1993. "How important is precautionary saving?," Working Paper Series / Economic Activity Section, Board of Governors of the Federal Reserve System (U.S.) 145, Board of Governors of the Federal Reserve System (U.S.).
  18. Christopher D Carroll, 1990. "Buffer-Stock Saving and the Life Cycle/Permanent Income Hypothesis," Economics Working Paper Archive, The Johns Hopkins University,Department of Economics 371, The Johns Hopkins University,Department of Economics, revised Aug 1996.
  19. Becker, Gary S & Mulligan, Casey B, 1997. "The Endogenous Determination of Time Preference," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 112(3), pages 729-58, August.
  20. Hausman, Jerry A, 1981. "Exact Consumer's Surplus and Deadweight Loss," American Economic Review, American Economic Association, American Economic Association, vol. 71(4), pages 662-76, September.
  21. Martin Feldstein & Andrew Samwick, 1992. "Social Security Rules and Marginal Tax Rates," NBER Working Papers, National Bureau of Economic Research, Inc 3962, National Bureau of Economic Research, Inc.
  22. Christopher D. Carroll, 1991. "Buffer stock saving and the permanent income hypothesis," Working Paper Series / Economic Activity Section, Board of Governors of the Federal Reserve System (U.S.) 114, Board of Governors of the Federal Reserve System (U.S.).
  23. Eric M. Engen & William G. Gale & John Karl Scholz, 1996. "The Effects of Tax-Based Saving Incentives On Saving and Wealth," NBER Working Papers, National Bureau of Economic Research, Inc 5759, National Bureau of Economic Research, Inc.
  24. Gourinchas, P.O. & Parker, J.A., 1997. "Consumption Over the Life Cycle," Working papers, Wisconsin Madison - Social Systems 9722, Wisconsin Madison - Social Systems.
  25. Sebastian Edwards, 1998. "The Chilean Pension Reform: A Pioneering Program," NBER Chapters, National Bureau of Economic Research, Inc, in: Privatizing Social Security, pages 33-62 National Bureau of Economic Research, Inc.
  26. Salvador Valdés & Peter Diamond, . "Social Security Reforms in Chile," Documentos de Trabajo, Instituto de Economia. Pontificia Universidad Católica de Chile. 161, Instituto de Economia. Pontificia Universidad Católica de Chile..
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:6219. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.