Observations on the Indexation of Old Age Pensions
This paper examines some positive and normative aspects of the inflation indexation of public and private pensions. The analysis showsthat alternative indexing arrangements may have far less impact on actual patterns of risk bearing than is usually thought to be the case. In so far as inflation indexing has real effects, there is no presumption that they are beneficial. In particular, the pre-commitment aspects of publicindexing may not be efficient. There are sound reasons to believe that voluntarily agreed on, non-indexed private pensions may well be efficient.Non-indexed pensions may result in an efficient allocation of risks given the other assets and liabilities of pension issuers and beneficiaries. In this case, indexation would impede the efficient allocation of risks. In this paper is also developed an ICOLI (interteinporal cost of living index) which is superior to conventional price indices as a way of evaluating the changes in real well being,associated with changes in wealth. The use of this measure has significant implications for the indexation of pensions, and for the question of what assets should be held in pension portfolios.
|Date of creation:||Nov 1982|
|Date of revision:|
|Publication status:||published as Summers, Lawrence H. "Observations on the Indexation of Old Age Pensions." Financial Aspects of the U.S. Pension System, edited by Zvi Bodie and John B. Shoven. Chicago: UCP, (1983), pp. 231-251 and 257-258.|
|Contact details of provider:|| Postal: |
Web page: http://www.nber.org
More information through EDIRC
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.:
- Zvi Bodie, 1981.
"Investment Strategy in an Inflationary Environment,"
NBER Working Papers
0701, National Bureau of Economic Research, Inc.
- Zvi Bodie, 1982. "Investment Strategy in an Inflationary Environment," NBER Chapters, in: The Changing Roles of Debt and Equity in Financing U.S. Capital Formation, pages 47-64 National Bureau of Economic Research, Inc.
- Breeden, Douglas T., 1979. "An intertemporal asset pricing model with stochastic consumption and investment opportunities," Journal of Financial Economics, Elsevier, vol. 7(3), pages 265-296, September.
- Pesando, James E, 1975. "A Note on the Rationality of the Livingston Price Expectations," Journal of Political Economy, University of Chicago Press, vol. 83(4), pages 849-58, August.
- Merton, Robert C, 1973. "An Intertemporal Capital Asset Pricing Model," Econometrica, Econometric Society, vol. 41(5), pages 867-87, September.
- Michael D. Hurd & John B. Shoven, 1983.
"The Economic Status of the Elderly,"
in: Financial Aspects of the United States Pension System, pages 359-398
National Bureau of Economic Research, Inc.
- Sims, Christopher A, 1980. "Macroeconomics and Reality," Econometrica, Econometric Society, vol. 48(1), pages 1-48, January.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:1023. 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 references are entirely missing, you can add them using this form.