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Pension expectations and reality. What do Italian workers know about their future public pension benefits?

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  • M. Baldini
  • C. Mazzaferro
  • P. Onofri

Abstract

We use 6 waves of the Bank of Italy s Survey on household income and wealth (SHIW) to check the evolution of workers expectations on future pension benefits and retirement age from 2000 to 2012. Based on these two subjective evaluations, we compute a measure of expected pension benefit and compare it with a true measure of the same variable that we estimate on the basis of the pension rules in each year of the considered time lapse. By comparing subjective and true measures of the variable, we are able to measure the evolution over time of the expectation error and its distribution among different economic and demographic subsets of the population. Finally, we estimate a subjective measure of social security wealth and the degree of substitution between this variable and the private net worth of workers households, in order to quantify the effects of pension reforms approved in the period considered on wealth accumulation.

Suggested Citation

  • M. Baldini & C. Mazzaferro & P. Onofri, 2015. "Pension expectations and reality. What do Italian workers know about their future public pension benefits?," Working Papers wp1007, Dipartimento Scienze Economiche, Universita' di Bologna.
    • Handle: RePEc:bol:bodewp:wp1007
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    References listed on IDEAS

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    1. Alan L. Gustman & Thomas L. Steinmeier, 2001. "Imperfect Knowledge, Retirement and Saving," NBER Working Papers 8406, National Bureau of Economic Research, Inc.
    2. Bottazzi, Renata & Jappelli, Tullio & Padula, Mario, 2006. "Retirement expectations, pension reforms, and their impact on private wealth accumulation," Journal of Public Economics, Elsevier, vol. 90(12), pages 2187-2212, December.
    3. William G. Gale, 1998. "The Effects of Pensions on Household Wealth: A Reevaluation of Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 106(4), pages 706-723, August.
    4. Jappelli, Tullio, 1995. "Does social security reduce the accumulation of private wealth? Evidence from Italian survey data," Ricerche Economiche, Elsevier, vol. 49(1), pages 1-31, March.
    5. Angelo Marano & Carlo Mazzaferro & Marcello Morciano, 2012. "The strengths and failures of incentive mechanisms in notional defined contribution pension systems," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 71(1), pages 33-70, October.
    6. Richard Disney & Tanner, Tanner, 1999. "What can we learn from retirement expectations data?," IFS Working Papers W99/17, Institute for Fiscal Studies.
    7. B. Douglas Bernheim, 1987. "Social Security Benefits: An Empirical Study of Expectations and Realizations," NBER Working Papers 2257, National Bureau of Economic Research, Inc.
    8. Luigi Guiso & Tullio Jappelli & Mario Padula, 2013. "Pension Wealth Uncertainty," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 80(4), pages 1057-1085, December.
    9. Feldstein, Martin S, 1974. "Social Security, Induced Retirement, and Aggregate Capital Accumulation," Journal of Political Economy, University of Chicago Press, vol. 82(5), pages 905-926, Sept./Oct.
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    Cited by:

    1. Bertoni, Marco & Brunello, Giorgio & Mazzarella, Gianluca, 2018. "Does postponing minimum retirement age improve healthy behaviors before retirement? Evidence from middle-aged Italian workers," Journal of Health Economics, Elsevier, vol. 58(C), pages 215-227.
    2. Markus Knell & Esther Segalla & Andrea Weber, 2015. "Expected retirement age and pension benefits in Austria: evidence from survey data," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 35-57.

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    More about this item

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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