Optimal Redistributive Pensions With Temptation And Costly Self-control

Jean-Denis Garon and Pier-André Bouchard St-Amant ()

No 1311, Working Paper from Economics Department, Queen's University

Abstract: We examine how the introduction of self-control preferences influences the trade-off between two fundamental components of a public pension system: the contribution rate and its degree of redistribution. The pension regime affects individuals' welfare by altering how yielding to temptation (i.e. not saving, or saving less) is attractive. We show that proportional taxation increases the cost of self-control, and that this adverse effect is more acute when public pensions become more redistributive. We examine how the introduction of self-control preferencesinfluences the trade-off between two fundamental components of a public pension system: the contribution rate and its degree of redistribution. The pension regime affects individuals' welfare by altering how yielding to temptation (i.e. not saving, or saving less) is attractive. We show that proportional taxation increases the cost of self-control, and that this adverse effect is more acute when public pensions become more redistributive.

Keywords: Taxation; Redistribution; Pensions; Self-Control (search for similar items in EconPapers)
JEL-codes: D03 H21 H55 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2013-08
New Economics Papers: this item is included in nep-age and nep-pbe
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Persistent link: https://EconPapers.repec.org/RePEc:qed:wpaper:1311

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