People have different financial behavior depending on their psychological characteristics, which can reflect security. Self-control is also an important predictor of with greater self-control are more likely to save money and less get into debt. Therefore, they secure satisfied situation. This paper explores whether good directly affects security or if its impact comes indirectly through behavi...

Savings for Unemployment in Good or Bad Times: Options for Developing Countries The paper describes and evaluates unemployment insurance savings accounts (UISAs) – a relatively new and not well-known way of providing unemployment benefits. The UISAs reduce work disincentives by allowing recipients to keep their own unused unemployment contributions, and offer the possibility to extend coverage ...

This paper is an empirical investigation of the behavioral life-cycle savings model. This model posits that self-control problems causes individuals to depart substantially from rational behavior. I show that this model can explain how the consumption of individuals at or near retirement vary with changes in different types of financial assets. Specifically, consumption spending is sensitive to...

This paper studies the design of a nonlinear social security scheme in a society where individuals differ in two respects: productivity and degree of myopia. Myopic individuals may not save “enough” for their retirement because their “myopic self” emerges when labor supply and savings decisions are made. The social welfare function is paternalistic: the rate of time preference of the far-sighte...

This study, originally a background paper for the National Commission on Social Security Reform and published as Appendix J in the Commission's Report, outlines the dimensions of the financing problem the Commission addressed. Prepared by Robert J. Myers, the Commission's Executive Director and a former Deputy Commissioner and Chief Actuary of the Social Security Administration, it discusses, i...

Social Security is in trouble. With declining population growth and rising life expectancy, the cost of Social Security benefits is rising relative to payroll tax revenues. As a result, the Social Security retirement fund is expected to run out around 2030.1 Recently, the 1994–1996 Advisory Council on Social Security (1997) proposed three different plans to address the problem. Interestingly, a...

Lévy processes can capture the behaviors of return innovations on a full range of financial securities. Applying stochastic time changes to the Lévy processes randomizes the clock on which the processes run, thus generating stochastic volatilities and stochastic higher return moments. Therefore, with appropriate choices of Lévy processes and stochastic time changes, we can capture the return dy...

Each year the Social Security Administration forecasts the financial status of the Old-Age, Survivors, and Disability Insurance (OASDI) programs by projecting trends in key variables such as the labor-force participation and earnings of the U. S. population. In the difficult task of projecting the long-term financial status of Social Security, assumptions are made concerning the relationship of...

The rational prodigality argument, which often serves to justify social security, is considered in a second-best tax framework with endogenous labor supply. Rational prodigality renders the familiar policies time inconsistent. We analyze time consistent policies and show that a wage tax suffices to rule out prodigality as a rational strategy. However, using savings subsidies, the solution can b...

De Nardi gratefully acknowledges support from the ERC, grant 614328 “Savings and Risks.” Yang gratefully acknowledges MRRC grant number 08098401, pursuant to a grant from the U.S. Social Security Administration (SSA) funded as part of the Retirement Research Consortium through the University of Michigan Retirement Research Center Award RRC08098401. We thank Joe Altonji, Monica Costa Dias, Richa...