AltInst: Alternatives to Social Security

"Social Security and Institutions for Intergenerational,
 Intragenerational and International Risk Sharing"

      BY: ROBERT SHILLER
              Yale University
              National Bureau of Economic Research (NBER)

Paper ID: National Bureau of Economic Research Working Paper No.
           6641
    Date: July 1, 1998

 Contact: ROBERT SHILLER
   Email: Mailto:shiller@econ.yale.edu
  Postal: Yale University
           30 Hillhouse Avenue
           New Haven, CT 06520 USA
   Phone: (203)432-3708
     Fax: (203)432-6167

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ABSTRACT:
 Social security system old age insurance systems are devices for
 the sharing of income risks of elderly people with others. Risks
 can be shared intergenerationally (with the young of the same
 country), intragenerationally (with other elderly of the same
 country), or internationally (with foreigners). Barriers to
 individuals themselves sharing their risks intergenerationally,
 intragenerationally, or internationally are described. Optimal
 design of government-sponsored social security systems is
 considered in light of these barriers. Alternative benefits and
 contributions formulas for pay-as-you-go social security systems
 are defined and compared with existing and proposed formulas in
 terms of their ability to fulfill the government's role in
 promoting risk sharing. Benefits for each retired person may be
 tied to that person's lifetime income without causing (as with
 the US benefits formula today) aggregate benefits for all
 elderly today to be tied to their past aggregate income.

JEL Classification: H55

Robin Hanson
hanson@econ.berkeley.edu http://hanson.berkeley.edu/
RWJF Health Policy Scholar, Sch. of Public Health 510-643-1884
140 Warren Hall, UC Berkeley, CA 94720-7360 FAX: 510-643-8614

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Received on Wed Oct 28 19:41:42 1998