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Five Fallacies in the Social Security Debate

Author

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  • Persson, Mats

    () (Institute for International Economic Studies, Stockholm University)

Abstract

This paper discusses five examples of the conventional wisdom that has often been expressed in the social security debate, even among academic economists. These are: 1. The major problem in most social security systems is that of demography: people simply live too long. 2. Disregarding the issue of demography, a Pay-As-You-Go system is inferior to a fully funded system since the former usually has a lower rate of return. 3. Disregarding the portfolio aspect (which might favor a PAYG system), a funded system dominates a PAYG system in a world of certainty. 4. The social security system is a suitable instrument for intergenerational risk sharing. 5. The government is a safe and reliable provider of insurance.

Suggested Citation

  • Persson, Mats, 2000. "Five Fallacies in the Social Security Debate," Seminar Papers 686, Stockholm University, Institute for International Economic Studies.
  • Handle: RePEc:hhs:iiessp:0686
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    References listed on IDEAS

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    1. Hassler, J. & Lindbeck, A., 1997. "Intergenerational Risk Sharing, Stability and Optimality of Alternative Pension Systems," Papers 631, Stockholm - International Economic Studies.
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    Cited by:

    1. Lindbeck, Assar & Persson, Mats, 2000. "What Are the Gains from Pension Reform?," Working Paper Series 535, Research Institute of Industrial Economics.
    2. Matsen, Egil & Thogersen, Oystein, 2004. "Designing social security - a portfolio choice approach," European Economic Review, Elsevier, vol. 48(4), pages 883-904, August.
    3. Kai A. Konrad & Gert Wagner, 2000. "Reform of the Public Pension System in Germany," Discussion Papers of DIW Berlin 200, DIW Berlin, German Institute for Economic Research.
    4. Øystein Thøgersen, 2006. "Intergenerational Risk Sharing by Means of Pay-as-you-go Programs – an Investigation of Alternative Mechanisms," CESifo Working Paper Series 1759, CESifo Group Munich.
    5. Willem Heeringa, 2008. "Optimal life cycle investment with pay-as-you-go pension schemes: a portfolio approach," DNB Working Papers 168, Netherlands Central Bank, Research Department.

    More about this item

    Keywords

    Social security;

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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