Universal pension scheme and risk-taking

Yao-Tung Chen, Yuh-Ju Lan, Ker-Tah Hsu, Keng-Shen Chen and Yu-Der Wang

Applied Economics Letters, 2015, vol. 22, issue 1, 7-11

Abstract: This article examines whether the existence of a universal pension scheme has any effect on a typical individual's willingness to take risks at a young age. The pension system will give the individual who is assumed to live for two periods a fixed amount in the second period regardless of his initial choice between certain and uncertain income patterns. It is found that with a grant in place for everyone after retirement that satisfies the basic need of consumption in any part of life where the typical individual is more risk-averse, he will always accept the risky projects that at least make him indifferent between sure incomes and uncertain profits in the first period.

Date: 2015
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DOI: 10.1080/13504851.2014.881965

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