Uncertainty and Optimal Social Security Systems

Optimization of Social Security Systems Under Uncertainty

Nonseparable preferences and optimal social security systems

In this paper, we consider economies in which agents are privately informed about their skills, which evolve stochastically over time. We require agents’preferences to be weakly separable between the lifetime paths of consumption and labor. However, we allow for intertemporal nonseparabilities in preferences like habit formation. We show that such nonseparabilities imply that optimal asset inco...

Optimal Consumption Taxes and Social Security Under Tax Measurement Problems and Uncertainty

A representative individual lives for two periods; works when young and depends on savings and a government operated social security system when old—the returns on both sources of income, when old, are random. Due to administrative problems the returns to savings are observed with some measurement error. Two alternative consumption tax systems are considered; the Registered Asset Treatment (RAT...

Individuals' Uncertainty about Future Social Security Benefits and Portfolio Choice.

Little is known about the degree to which individuals are uncertain about their future Social Security benefits, how this varies within the U.S. population, and whether this uncertainty influences financial decisions related to retirement planning. To illuminate these issues, we present empirical evidence from the Health and Retirement Study Internet Survey and document systematic variation in ...

The Optimal Design of Social Security Benefits

Th is research examines the ex-ante optimal U.S. Social Security benefi t structure using the model developed in Nishiyama and Smetters (2007). Whereas NS2007 analyzed the effi ciency of diff erent, specifi c alternative designs of the U.S. Social Security system, the current paper attempts to derive the ex-ante best system design among a larger range of diff erent potential Social Security fo...