ECONOMIC RATIONALES FOR CONSTRAINTS ON CHOICE WITH APPLICATION TO SOCIAL SECURITY

The concern of this dissertation is only peripherally with the resolution of the controversies currently surrounding the social security program in the United States. Interest instead centers on the discovery of economic rationales for mandatory pension programs in general, the author's belief being that current justifications are insubstantial.;A different set of explanatory structures conceives of social security as first and foremost an intergenerational transfer program. Considerable space is devoted to tracing both positive and normative implications of converting from private intra-family intergenerational transfers to a public mandatory transfer scheme, given that both young and old experience utility functions which include the well-being of the other as components. It is demonstrated that the switch from a private to a public mode of accomplishing transfers can be a Pareto-optimal move if certain conditions of the parties' respective utility functions are fulfilled.;Toward the work's end, attention shifts from the question of "ultimate rationales" for mandatory pension programs to the question of social security's effect on labor force participation. The labor supply implications of the previously presented explanatory structures are spelled out. It is suggested that while decreased labor supply is implied by each of the models, this decrease in work represents not a "failure" but simply one manifestation of a mandatory pension plan's primary intent.;Two of the explanatory structures presented start from the premise that social security is most usefully regarded as a substitute for private savings. The first of these structures centers on the idea of self-paternalism. It is demonstrated that the notion of a meta-preference (second-order preference) ordering sheds considerable light on why an agent might deliberately constrain future choice. It is additionally shown that the meta-preference construct permits such self-paternalistic actions to be regarded as causing unequivocal welfare gains for the individual. This contrasts markedly with previous explanations of self-imposed constraints, all of which were incapable of permitting welfare conclusions to be drawn. Another model in the "substitution for savings" tradition develops the possibility that mandatory pension programs might be solutions to "signaling dilemmas.".