Title

On Myopia as Rationale for Social Security

Campus Units

Economics

Document Type

Article

Publication Version

Submitted Manuscript

Publication Date

5-2011

Journal or Book Title

Economic Theory

Volume

47

First Page or Article ID Number

135

Last Page

158

DOI

10.1007/s00199-010-0528-z

Abstract

This paper revisits the role played by myopia in generating a theoretical rationale for pay-as-you-go social security in dynamically efficient economies. Contrary to received wisdom, if the real interest rate is exogenously fixed, enough myopia may justify public pensions but never alongside positive private savings. With sufficient myopia, co-existence of positive optimal pensions and positive private saving is possible if the real interest rate on saving evolves endogenously, as in a model with a neoclassical technology.

JEL Classification

H55, E6

Comments

This is a working paper of an article published as Andersen, T.M., Bhattacharya, J. On myopia as rationale for social security. Econ Theory 47, 135–158 (2011). doi:10.1007/s00199-010-0528-z. Posted with permission.

Copyright Owner

Springer-Verlag

Language

en

File Format

application/pdf

Published Version

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