search query: @author Willen, P. / total: 2
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| Author: | Hurst, E. Willen, P. |
| Title: | Social security and unsecured debt |
| Journal: | Journal of Public Economics
2007 : AUG, VOL. 91:7-8, p. 1273-1297 |
| Index terms: | social security portfolio selection life cycles models |
| Freeterms: | households |
| Language: | eng |
| Abstract: | This paper uses a calibrated life-cycle model to explore quantitatively ways of reducing the burden of social security (here as: soc-sec.) in a world populated by both optimizing and rule-of-thumb consumers. Household data is used to document that young households (as: h-holds) have accumulated soc-sec. contributions (as: cbtrs.) that are large relative to debt holdings. Using a calibrated life-cycle model, it is shown that both allowing h-holds to use soc-sec. wealth to pay off their debt and exempting young h-holds from soc-sec. cbtrs. mitigate many of the inefficiencies of soc-sec. from the perspective of life-cycle financial planning. ... It is found that certainty-equivalent consumption increases by 3.4 percent for optimizing h-holds and by 3.3 percent for rule-of-thumb h-holds. |
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