| Essay 1: Outliving its Usefulness? Mortality rates have improved at all ages. This paper examines the welfare-generating role of survivorship in a simple fully funded social security system, and finds that much of the power of social security to achieve individual welfare gains has been eroded by improved mortality. The paper also develops a measure of the utility of accidental bequests. The Addendum extends the analysis to a paygo social security system.;Essay 2: A Hybrid Reform. Heterogeneous ability/income which is correlated with longevity is incorporated into a large scale general equilibrium overlapping generations economy. I propose a hybrid refom of Social Security which includes (i) a paygo advanced old age government pension, and (ii) personal accounts to finance the early retirement ages. These policy reforms are studied in a life cycle consumer framework where households face temptation and self-control problems. Our analysis indicates that the economy with the hybrid reform is able to sustain higher levels of capital intensity, and therefore consumption, than either an economy with Social Security or an economy with no Social Security. In addition, the proposed hybrid reform reduces wealth inequality.;Essay 3: Consumer Surplus: What accounts for the continued popularity of Social Security? Compensating variations and willingness-to-pay are analyzed by type of worker, to see if Social Security results in consumer surplus. Heterogeneous ability/income which is correlated with longevity is incorporated into a large scale general equilibrium overlapping generations economy. This model is used to measure welfare under both Social Security and No Social Security, in a variety of alternative experiments. We find consumer surplus under paygo Social Security when benefits start at older ages and in lower amounts. We find that with the Hybrid Reform, individual welfare increases with the social insurance program, and some agents are willing-to-pay more than the required tax, when analyzed in a temptation preferences framework. |
