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Uncertain policy for an uncertain world: The case of social security

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  • John Sabelhaus

    (No affiliation)

  • Julie Topoleski

    (No affiliation)

Abstract

Analysis and discussion of Social Security policy are usually based on expected fiscal and societal outcomes. However, future demographic and economic trends are uncertain, and thus ultimate outcomes for aggregate system financial flows and the distribution of taxes and benefits across generations are uncertain. This paper analyzes a state-dependent approach to policy in which future Social Security benefit formulas are tied to realized economic and demographic outcomes over time. The results, based on a microsimulation model with stochastic capabilities, show the extent to which it is possible to systematically address uncertainty about system finances and distributional outcomes. © 2007 by the Association for Public Policy Analysis and Management

Suggested Citation

  • John Sabelhaus & Julie Topoleski, 2007. "Uncertain policy for an uncertain world: The case of social security," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 26(3), pages 507-525.
    • Handle: RePEc:wly:jpamgt:v:26:y:2007:i:3:p:507-525
    DOI: 10.1002/pam.20263
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    References listed on IDEAS

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    Cited by:

    1. John Sabelhaus & Lina Walker, 2009. "Econometric flexibility in microsimulation: an age-centred regression approach," International Journal of Microsimulation, International Microsimulation Association, vol. 2(2), pages 1-14.
    2. John Sabelhaus & Lina Walker, 2007. "Economic Flexibility in Microsimulation: An Age-Centered Regression Approach: Working Paper 2007-02," Working Papers 18295, Congressional Budget Office.
    3. Hugo Benitez-Silva & Frank Heiland, 2008. "Early Retirement, Labor Supply, and Benefit Withholding: The Role of the Social Security Earnings Test," Working Papers wp183, University of Michigan, Michigan Retirement Research Center.
    4. Hugo Benitez-Silva & Debra S. Dwyer & Frank Heiland & Warren C. Sanderson, 2006. "Retirement and Social Security Reform Expectations: A Solution to the New Early Retirement Puzzle," Department of Economics Working Papers 06-05, Stony Brook University, Department of Economics.
    5. Batabyal, Amitrajeet & Nijkamp, Peter, 2016. "On Pessimism and Optimism by Forward Looking Agents and the Need for Social Security," MPRA Paper 75965, University Library of Munich, Germany, revised 03 Jan 2017.

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