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Optimal Redistributive Pensions with Temptation and Costly Self-Control

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  • Bouchard St-Amant, Pier-Andre
  • Garon, Jean-Denis

Abstract

We examine how the introduction of self-control preferences influences the trade-off between two fundamental components of a public pension system: the contribution rate and its degree of redistribution. The pension regime affects individuals' welfare by altering how yielding to temptation (i.e. not saving, or saving less) is attractive. We show that proportional taxation increases the cost of self-control, and that this adverse effect is more acute when public pensions become more redistributive.

Suggested Citation

  • Bouchard St-Amant, Pier-Andre & Garon, Jean-Denis, 2013. "Optimal Redistributive Pensions with Temptation and Costly Self-Control," Queen's Economics Department Working Papers 274636, Queen's University - Department of Economics.
    • Handle: RePEc:ags:quedwp:274636
    DOI: 10.22004/ag.econ.274636
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles

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