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| Author: | Cremer, H. (et al.) |
| Title: | Voting over type and generosity of a pension system when some individuals are myopic |
| Journal: | Journal of Public Economics
2007 : NOV, VOL. 91:10, p. 2041-2061 |
| Index terms: | distribution labour supply pension schemes retirement savings social security |
| Language: | eng |
| Abstract: | This article analyses the determination through majority voting of a pension scheme in a situation where society consists of far-sighted and myopic individuals. All individuals are characterized by same basic preferences but myopics tend to adopt a short-term view in questions of retirement saving and labor supply. This leads them to suffer from low consumption after retirement and regret their insufficient saving decisions. This is anticipated which leads them to commit themselves into forced saving by voting. Pension scheme considered in this paper is characterized by two parameters: the payroll tax rate and the "Bismarckian factor" that determines its redistributiveness. Individuals vote sequentially. The purpose is to examine how myopic agents influence on the generosity and redistributiveness of the pension system. The main finding is that if all individuals are one of kind the chosen pension system is always flat one. In other cases the pension system chosen may be less distributive. |
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