Voting over type and generosity of a pension system when some individuals are myopic
This paper studies the determination through majority voting of a pension scheme when society consists of far-sighted and myopic individuals. All individuals have the same basic preferences but myopics tend to adopt a short-term view (instant gratification) when dealing with retirement saving and labor supply. Consequently, they will find themselves with low consumption after retirement and regret their insufficient savings decisions. Henceforth, when voting they tend to commit themselves into forced saving. We consider a pension scheme that is characterized by two parameters: the payroll tax rate (that determines the size or generosity of the system) and the â€œBismarckian factorâ€ that determines its redistributiveness. Individuals vote sequentially. We examine how the introduction of myopic agents affects the generosity and the redistributiveness of the pension system. Our main result is that a flat pension system is always chosen when all individuals are of one kind (all far-sighted or all myopic), while a less redistributive system may be chosen if society is composed of both myopic and far-sighted agents. Furthermore, while myopic individuals tend to prefer larger payroll taxes than their far-sighted counterparts, the generosity of the system does not always increase with the proportion of myopics.
|Date of creation:||2007|
|Date of revision:|
|Publication status:||Published in Journal of Public Economics|
|Contact details of provider:|| Postal: |
Web page: http://www.international.inra.fr
More information through EDIRC
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.:
- Lindbeck, Assar & Persson, Mats, 2002.
"The Gains from Pension Reform,"
712, Stockholm University, Institute for International Economic Studies.
- David I. Laibson & Andrea Repetto & Jeremy Tobacman, 1998. "Self-Control and Saving for Retirement," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(1), pages 91-196.
- Peter Diamond, 2004. "Social Security," American Economic Review, American Economic Association, vol. 94(1), pages 1-24, March.
- J. Ignacio Conde-Ruiz & Paola Profeta, 2007.
"The Redistributive Design of Social Security Systems,"
- J. Ignacio Conde-Ruiz & Paola Profeta, 2007. "The Redistributive Design of Social Security Systems," Economic Journal, Royal Economic Society, vol. 117(520), pages 686-712, 04.
- Michele Boldrin & Aldo Rustichini, 2000. "Political Equilibria with Social Security," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 3(1), pages 41-78, January.
- Bénabou, Roland & Tirole, Jean, 2002.
"Willpower and Personal Rules,"
CEPR Discussion Papers
3143, C.E.P.R. Discussion Papers.
- Feldstein, Martin S, 1985.
"The Optimal Level of Social Security Benefits,"
The Quarterly Journal of Economics,
MIT Press, vol. 100(2), pages 303-20, May.
- Hubbard, R Glenn & Skinner, Jonathan & Zeldes, Stephen P, 1995.
"Precautionary Saving and Social Insurance,"
Journal of Political Economy,
University of Chicago Press, vol. 103(2), pages 360-99, April.
- R. Glenn Hubbard & Jonathan Skinner & Stephen P. Zeldes, 1994. "Precautionary Saving and Social Insurance," NBER Working Papers 4884, National Bureau of Economic Research, Inc.
- Glenn R. Hubbard & Jonathan Skinner & Stephen P. Zeldes, . "Precautionary Saving and Social Insurance," Rodney L. White Center for Financial Research Working Papers 03-95, Wharton School Rodney L. White Center for Financial Research.
- Glenn R. Hubbard & Jonathan Skinner & Stephen P. Zeldes, . "Precautionary Saving and Social Insurance," Rodney L. White Center for Financial Research Working Papers 3-95, Wharton School Rodney L. White Center for Financial Research.
- 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, vol. 25(1), pages 85-180.
- André Masson & Daniel Verger & Luc Arrondel, 2004. "Mesurer les préférences individuelles pour le présent," Économie et Statistique, Programme National Persée, vol. 374(1), pages 87-128.
When requesting a correction, please mention this item's handle: RePEc:inr:wpaper:23283. 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: (Administrateur de ProdInra)
If references are entirely missing, you can add them using this form.