Mortality Regressivity and Pension Design

Svetlana Pashchenko, Ponpoje Porapakkarm and Youngsoo Jang

MPRA Paper from University Library of Munich, Germany

Abstract: How should we compare welfare across pension systems in presence of differential mortality? A commonly used standard utilitarian criterion implicitly favors the long-lived over the short-lived. We investigate under what conditions this ranking is reversed. We clearly distinguish between the redistribution along mortality and income dimensions, and thus between mortality and income progressivity. We show that when mortality is independent of income, mortality progressivity can be optimal only when (i) there is more aversion to inequality in lifetime utilities compared to aversion to consumption inequality, (ii) life is valuable. When the short-lived tend to have lower income, mortality progressivity can be also optimal when income redistribution tools are limited. In this case, mortality progressivity is used to substitute for income progressivity.

Keywords: Mortality-related redistribution; Pensions; Social Security; Annuities; Life-Cycle Model (search for similar items in EconPapers)
JEL-codes: G22 H21 H55 I38 (search for similar items in EconPapers)
Date: 2023-07-14
New Economics Papers: this item is included in nep-age, nep-dem, nep-pbe and nep-upt
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https://mpra.ub.uni-muenchen.de/117936/1/MortalityRegressivity.pdf original version (application/pdf)

Related works:
Working Paper: Mortality Regressivity and Pension Design (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:117936

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