Social Security’s Five OASI Inflation Indexing Problems
AbstractThis paper examines five problems with the inflation indexing procedures used by the Social Security Administration in taking inflation into account when calculating Old Age and Survivors Insurance (OASI) Benefits. Several of these problems have capricious distributional consequences. For example, as a result of Problems #2 and #4 your OASI check will be larger if wage inflation happens to be extra high in your 60th year or if price inflation is exceptionally low in your 61st year. And because of Problem #1, the size of the benefit increase you will receive if you elect to postpone retirement and the start of OASI benefits depends in part on the pace of inflation. While indexing problems do not attract much attention in normal times, they can contribute to serious short-run financial instability for the OASI trust funds in periods of substantial inflation.
Download InfoIf 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.
Bibliographic InfoPaper provided by Wesleyan University, Department of Economics in its series Wesleyan Economics Working Papers with number 2008-006.
Length: 36 pages
Date of creation: Jul 2008
Date of revision: 30 Oct 2008
Publication status: Published on-line at economics http://www.economics-ejournal.org/
Note: Earlier versions available at http://repec.wesleyan.edu/pdf/mlovell/2008006_lovell.pdf , http://repec.wesleyan.edu/pdf/mlovell/2008006rev0908_lovell.pdf and http://repec.wesleyan.edu/pdf/mlovell/2008006rev1008_lovell.pdf
Contact details of provider:
Postal: PAC 123, 238 Church Street, Middletown, CT 06459-0007
Web page: http://www.wesleyan.edu/econ/
More information through EDIRC
Other versions of this item:
- Lovell, Michael C., 2009. "Social Security's Five OASI Inflation Indexing Problems," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 3(3), pages 1-41.
- Lovell, Michael C., 2008. "Social Security's Five OASI Inflation Indexing Problems," Economics Discussion Papers 2008-34, Kiel Institute for the World Economy.
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
This paper has been announced in the following NEP Reports:
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.:
- Alan L. Gustman & Thomas L. Steinmeier, 2000.
"How Effective is Redistribution Under the Social Security Benefit Formula?,"
wp005, University of Michigan, Michigan Retirement Research Center.
- Gustman, Alan L. & Steinmeier, Thomas L., 2001. "How effective is redistribution under the social security benefit formula?," Journal of Public Economics, Elsevier, vol. 82(1), pages 1-28, October.
- Alan L. Gustman & Thomas L. Steinmeier, 2000. "How Effective is Redistribution Under the Social Security Benefit Formula?," NBER Working Papers 7597, National Bureau of Economic Research, Inc.
- Martin Feldstein, 2005.
"Rethinking Social Insurance,"
NBER Working Papers
11250, National Bureau of Economic Research, Inc.
- Song, Jae G. & Manchester, Joyce, 2007. "New evidence on earnings and benefit claims following changes in the retirement earnings test in 2000," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 669-700, April.
- Rogerson, Richard & Wallenius, Johanna, 2009.
"Micro and macro elasticities in a life cycle model with taxes,"
Journal of Economic Theory,
Elsevier, vol. 144(6), pages 2277-2292, November.
- Richard Rogerson & Johanna Wallenius, 2007. "Micro and Macro Elasticities in a Life Cycle Model With Taxes," NBER Working Papers 13017, National Bureau of Economic Research, Inc.
- Alicia H. Munnell & Dan Muldoon, 2008. "The Impact of Inflation on Social Security Benefits," Issues in Brief ib2008-8-15, Center for Retirement Research, revised Oct 2008.
- Andrew G. Biggs & Jeffrey R. Brown & Glenn Springstead, 2005.
"Alternative Methods of Price Indexing Social Security: Implications for Benefits and System Financing,"
NBER Working Papers
11406, National Bureau of Economic Research, Inc.
- Biggs, Andrew G. & Brown, Jeffrey R. & Springstead, Glenn, 2005. "Alternative Methods of Price Indexing Social Security: Implications for Benefits and System Financing," National Tax Journal, National Tax Association, vol. 58(3), pages 483-504, September.
- James E. Duggan & Robert Gillingham & John S. Greenlees, 1996. "Distributional Effects of Social Security: the Notch Issue Revisited," Public Finance Review, , vol. 24(3), pages 349-370, July.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Manolis Kaparakis).
If references are entirely missing, you can add them using this form.