Welfare Implications of Net Social Security Wealth

Leigh Tesfatsion ()

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

Abstract: Real net social security wealth (NSSW), the real present value of social security benefits received minus social security taxes paid, is frequently used as a direct proxy measure for the impact of a social security system on generation welfare. This article examines the relationship between real NSSW and generation welfare in a 3-period lived overlapping generations economy. It demonstrates that NSSW can be a very poor proxy for the effects of a social security system on generation welfare. For example, NSSW can actually be negatively correlated with welfare for every generation due to price distortion effects. Annotated pointers to related work can be accessed here: http://www2.econ.iastate.edu/tesfatsi/dehome.htm

Keywords: social security; overlapping generations; net social security wealth; price distortion (search for similar items in EconPapers)
JEL-codes: D6 E2 E6 (search for similar items in EconPapers)
Date: 1984-01-01
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Citations: View citations in EconPapers (1)

Published in Journal of Public Economics 1984, vol. 24

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Persistent link: https://EconPapers.repec.org/RePEc:isu:genres:11208

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