On Myopia as Rationale for Social Security

Torben M Andersen and Joydeep Bhattacharya ()

Staff General Research Papers from Iowa State University, Department of Economics

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.

Keywords: myopia; pensions; social security; dynamic efficiency (search for similar items in EconPapers)
JEL-codes: E0 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac
Date: 2008-09-10
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Working Paper: On Myopia as Rationale for Social Security (2008)
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Persistent link: http://EconPapers.repec.org/RePEc:isu:genres:12985

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