delays in claiming social security benefits this paper focuses on social security benefit claiming behavior a takeup decision that has been ignored in the previous literature using financial calculations and simulations based on an expected utility maximization model we show that delaying benefit claim for a period of time after retirement is optimal in a wide variety of cases and that gains from delay may be significant we find that approximately 10 of men retiring before their 62nd birthday delay claiming for at least one year after eligibility we estimate hazard and probit models using data from the new beneficiary data system to test four cross sectional predictions while the data suggest that too few men delay we find that the pattern of delays by early retirees is generally consistent with the hypotheses generated by our theoretical model

pocketbook voting social preferences and expressive motives in referenda we develop and test a theory of voting and turnout decisions that integrates self interest social preferences and expressive motives our model implies that if pocketbook benefits are relevant voters either perceive their impact on the outcome to be non negligible or expressive motivations do not play a role in the decision on how to vote conversely if own pocketbook benefits do not explain voting then voting is expressive if the perceived probability of being pivotal is non negligible social preferences and expressive concerns are observationally equivalent our empirical analysis studies collective choices which are analogous to decisions on local public goods we consider referenda among university students on whether to collectively purchase deeply discounted flat rate tickets for public transportation and cultural amenities individual usage data allow quantifying the monetary benefits associated with each ticket as voters had precise information on the individual costs and benefits our setting comprises a real world laboratory of direct democracy we find that monetary benefits strongly influence participation and voting however social or expressive motives such as stated altruism environmental concerns and paternalism are decisive for a significant minority our results rule out purely expressive voting and imply that a substantial share of the electorate perceived their impact on the outcome to be non negligible

an evaluation of the life cycle effects of minimum pensions on retirement behavior in this paper we explore the effects of the minimum pension program on welfare and retirement in spain this is done with a stylized life cycle model which provides a convenient analytical characterization of optimal behavior we use data from the spanish social security to estimate the behavioral parameters of the model and then simulate the changes induced by the minimum pension in aggregate retirement patterns the impact is substantial there is a threefold increase in retirement at 60 the age of first entitlement with respect to the economy without minimum pensions and total early retirement before or at 60 is almost 50 larger copyright 2007 john wiley sons ltd

centralized versus decentralized provision of local public goods a political economy approach abstract this paper takes a fresh look at the trade off between centralized and decentralized provision of local public goods it argues that the sharing of the costs of local public spending in a centralized system will create a conflict of interest between citizens in different jurisdictions when spending decisions are made by a legislature of locally elected representatives this conflict of interest will play out in the legislature depending on precisely how the legislature behaves the result may be excessive public spending or allocations of public goods characterized by uncertainty and misallocation across districts the extent of the conflict of interest between districts is affected by spillovers and differences in tastes for public spending thus the relative performance of centralized and decentralized systems depends upon spillovers and differences in tastes for public spending but for different reasons than suggested in the existing literature

an experimental test on retirement decisions i introduction the reform of social security systems is now one of the main issues on the economic policy agenda of most industrialized countries it is widely considered that unless serious changes take place the aging of the population implying a rise in the number of retirees relative to that of workers will threaten the viability of pay as you go public pension systems in the long run this threat is being reinforced by the progressive reduction in the retirement age of the working population the central reforms that are being proposed to neutralize these future financing problems are the raising of the contribution rate the decreasing of pension benefits or and the delay of the retirement age with reference to this latter reform as blondal and scarpetta 1998 state a direct way to encourage people to work longer would be to raise the pensionable age but delaying the retirement age may not be very popular according to recent surveys most workers claim that they are happy with the current retirement age see cremer and pestieau 2003 this may help to explain why reforms on the legal retirement age have currently become a very delicate matter for governments 1 on the other hand pension systems in virtually all organization for economic cooperation and development oecd countries in the mid 1990s made it financially unattractive to work after the age of 55 see gruber and wise 1997 or blondal and scarpetta 1998 indeed the general consensus in the theoretical literature related to social security and retirement decisions is that pension systems create enormous incentives to leave the labor force early 2 therefore increasing the retirement age as a tool to improve the financial problems of public pensions systems faces two sensitive problems the opposition of workers to a delay in the standard retirement age and the disincentives to continuous work being embedded in the pension system the large decline in labor force participation is attributed to the specific fact that to keep on working implies a reduction in the present value of total pension benefits the terms old age pension wealth and implicit tax on postponing retirement have been frequently used to illustrate these disincentives in the pension system the old age pension wealth is the discounted value of expected pension benefits minus the discounted cost of obtaining such benefits after the earliest age at which pensions can be accessed working for an extra year may imply changes in this pension wealth by foregoing 1 yr of pensions paying contributions for an additional year and maybe increasing the pension benefits per year therefore if the costs of postponing retirement are higher than the gains then it is considered that the pension system is implicitly taxing to prolong the working period that is the drop in pension wealth acts as an implicit tax on income from continued work and as such is a clear incentive to retire early actually reforms aiming to increase the effective retirement age to improve the financial problems of public pensions systems have mainly focused on the reduction of this implicit tax on prolonging the working period it is also considered that when the increase in pension benefits is exactly offset by the higher cost in terms of contributions and forgone pensions the pension system is not distorting the retirement decision that is the pension systems that are marginally actuarially fair will not distort individual decisions concerning retirement age and consequently they are defined as neutral systems for this reason the main economic policy measures move in the direction of strengthening the link between lifetime contributions and pension benefits 3 indeed this reform is one of the policy conclusions of maintaining prosperity in an ageing society oecd 2000 the most appropriate reform would be to allow people to retire at the age of their own choice and to adjust pension level so that the pension system is neutral on average

interdependency of personal savings and labour force participation of the elderly and social security wealth a time series analysis using japanese annual time series data covering the period 1950 1982 our study shows that social security wealth during this period depressed personal savings as a result there was a reduction of approximately 79000 yen of wealth per capitain real terms from 1960 to 1980 however the declining labour force participation of elderly males brought about for example by earlier retirement stimulated personal savings by an estimated 13000 yen over the same period the results indicate that the benefit effect tends to outweigh the retirement effect furthermore this study has identified a negative interdependency between the level of personal savings and the retirement behaviour of elderly males a typical male worker saves more before retirement if that individual expects to stay a shorter time in the labour market retirement behaviour is less responsive to a change in personal savings behaviour than vice versa

the effect of old age assistance on retirement abstract researchers have devoted considerable attention to analyzing the impact of social security on retirement with mixed findings however the means tested program old age assistance oaa dwarfed social security until the 1950s and coincided with the early decline in elderly labor force participation also oaa benefits were determined by the states a key source of policy variation i estimate the relationship between oaa benefits and elderly participation using individual data from the 1940 and 1950 censuses oaa s impact is found to be strong and implies that participation would have risen slightly instead of falling if benefits had not increased during the 1940s

on the efficiency of equilibria in a legislative bargaining model with particularistic and collective goods this study analyzes the efficiency of equilibria in a multilateral bargaining game in which a legislature divides its budget among collective and particularistic goods in order to disentangle the causes of inefficiency we extend the model of volden and wiseman am polit sci rev 101 79 92 2007 by considering quasi linear utility functions and consensus requirements ranging from simple majority to unanimity although unanimous agreements can be reached under weaker consensus requirements we show that pareto inefficiency is associated with non unanimous consent we also study how i the endogenous selection of the legislature s size or ii a sequential choice of collective and particularistic spending eliminates or attenuates the inefficiency problem

consumption saving and fiscal policy when this year s nobel laureate robert solow and ely lecturer alan blinder teamed their impressive talents several years ago to ask does fiscal policy matter the answer they gave was a resounding yes working in a then sophisticated neo keynesian is lm tradition blinder and solow presented a parsimonious macroeconomic model and some statistical and historical evidence suggesting that changes in the weighted standardized government surplus did indeed substantially affect real economic activity the profession was pretty much convinced that the permanent income hypothesis pih or life cycle hypothesis lch almost provided a sufficient framework for analyzing consumption and saving and hence the effects of fiscal policy curiously the large keynesian effect of a tax induced rise in current disposable income was reconciled with the very small effect predicted by the longerhorizon models with more of a whimper than a bang since then the profession has moved some distance from complete acceptance of the life cycle and permanent income hypotheses and perhaps even further from the traditional consumption function specification in vogue at that time indeed robert barro 1974 rekindled the notion that a tax fordebt swap would have no real effects an avalanche of analytical and empirical research has sharpened our understanding of the issues involved the econometric difficulties in estimating the relevant parameters and even the care necessary in defining what is meant when one asks whether fiscal policy has any real economic effects surprisingly despite numerous caveats new and improved data and estimation techniques and improved perspectives offered by analytical insights not yet prevalent when blinder and solow wrote their paper my conclusion is that their answer is essentially correct fiscal policy does matter both for short run stabilization purposes and for long run capital accumulation i believe the preponderance of the evidence strongly supports this view although the empirical research suggests that the impact of say tax cuts on consumption is perhaps only one third as large as the typical keynesian estimate of two decades ago but much larger than the neutrality predicted by ricardian equivalence or the very small effect predicted by the pih or lch

bargaining in legislatures bargaining in legislatures is conducted according to formal rules specifying who may make proposals and how they will be decided legislative outcomes depend on those rules and on the structure of the legislature although the social choice literature provides theories about voting equilibria it does not endogenize the formation of the agenda on which the voting is based and rarely takes into account the institutional structure found in legislatures in our theory members of the legislature act noncooperatively in choosing strategies to serve their own districts explicitly taking into account the strategies members adopt in response to the sequential nature of proposal making and voting the model permits the characterization of a legislative equilibrium reflecting the structure of the legislature and also allows consideration of the choice of elements of that structure in a context in which the standard institution free model of social choice theory yields no equilibrium

social security and the retirement decision the effect of social security and private pensions on individual retirement decisions is modeled relaxing in turn three commonly maintained assumptions perfect capital markets actuarial fairness and certain lifetimes which together imply that there is no effect in each case raising the contribution level can cause systematic changes of either sign in general in individual retirement decisions for social security the effects associated with forced saving and deviations from actuarial fairness probably tend to advance retirement but those effects that arise solely from the insurance aspect of social security and private pensions are ambiguous in sign owing to the presence of a substitution effect that tends to delay retirement because the insurance benefits can be fully realized only by working longer

the effect of residential location on retirement age theory and some evidence on male behaviour in the us retirement age choice is introduced into a conventional model of residential location to show that the retirement age of workers who do not move after retirement can be influenced by the urban variation of leisure and housing prices a retirement demand equation that incorporates commuting characteristics is estimated on a sample of us urban male owners interviewed by the panel study of income dynamics it is found that commuters retire around two years earlier than comparable home based workers although the evidence provides no support for this gap to be the result of differences in leisure or housing prices across both groups

erratum to bargaining in legislatures over particularistic and collective goods american political science review 101 1 79 92 the symmetric stationary subgame perfect nash equilibrium in volden and wiseman 2007 is characterized by cutpoints between regions of purely collective mixed and purely particularistic bud get allocations the cutpoints in our published arti cle were derived by finding conditions under which the proposer receives a higher utility in one region than in another however a stationary equilibrium requires that the proposer would not unilaterally of fer a different type of proposal given that all other players continue to play their present strategies 1 re analyzing the game in this way we find that the qualitative nature of the equilibrium for the closed rule and open rule games is unchanged although the cutpoint cxmp between the mixed and particu laristic parts of the equilibrium must be altered as follows

the effect of social security on retirement in the early 1970s we analyze detailed longitudinal data on a cohort of males aged 58 67 in 1969 1973 a period of substantial increases in real social security benefits we find the following 1 the accelerating decline in labor force participation of elderly men in 1969 1973 can be explained by the large increase in real social security benefits 2 there is evidence of a liquidity constraint effect for an important subgroup of the elderly 3 the magnitude of this induced retirement effect is large enough that ignoring it can lead to serious underestimation of the fiscal implications of changes in benefit provisions our results are interpreted in the historical context of a particular cohort undergoing major unanticipated transfers of wealth the steady state effects of social security on retirement may not be the same

considering the investment decisions with real options games approach abstract the mix of games theory with the real options has been a dynamic range of exploration in the most recent decade the engaging quality of the specialists for displaying aggressive speculation choices by blending ideas from both hypotheses is on account of a venture choice in a focused business sector can be seen in its substance as a game between firms in this paper we expand a model to consider finite horizon real option games under incomplete information with various parameters in incomplete information games firms actions express significant information about profitability to contestants the encapsulation of this information proposed original blocks in models with strategic interactions this is because of circularity where best exercise decisions are based on previous decisions taken which at a given time are quiet to be mentioned because about the dynamic programming principle we expand an extended version of the least squares monte carlo algorithm to confront these results the model can aid in understanding the relation between strategic optionality and information besides how this influences the best decision policy and its value results we find the informational feature is of great significance for firms best decision policy and optimization of project values

what is the probability your vote will make a difference i introduction what is the probability that one vote will make a difference this is of interest in the utility theory of voting and also for campaign strategists who must assess the costs and benefits of attempting to persuade or turn out voters in particular states 1 in a presidential election the probability that your vote is decisive is equal to the probability that your state is necessary for an electoral college win times the probability the vote in your state is tied conditional on your state being necessary broadly speaking there are three ways of estimating the probability of a decisive vote the first approach and the oldest in the literature 2 is to set up a theoretical model for the joint distribution of the popular vote margin in the separate jurisdictions in this case the 50 states plus the district of columbia and then analytically compute the probability of each state being nationally decisive and locally tied such models offer important insights but are not directly useful for presidential elections given that our interest is in the particularities of individual states in 2008 rather than on general properties of an electoral system the second approach is purely empirical an estimate of the form y n where n is the number of elections in some large historical sample and y is the number that were tied elections are very rarely tied so one can instead use an estimate such as y 2 000 n where y is now the number of elections decided by less than 1 000 votes such an empirical analysis can be embedded into a regression of vote differential on election level predictors mulligan and hunter 2003 use such a model for estimating the average probability of a decisive vote in legislative elections and gelman katz and bafumi 2004 use the distribution of aggregate vote margins to study the dependence of the probability of a tie on the number of voters 3 unfortunately the complex structure and the small number of presidential elections rule out a purely empirical approach in this case the third method which we use here is to set up a forecasting model for the current election the uncertainties for the 50 statewide elections in such a model should be correlated or equivalently the model should have a national error term and possibly regional error terms in addition to any independent state errors given a forecast that is a joint probability distribution one can calculate the probability of decisive vote using simulation or in a setting such as a national election in which the probability of a tied election is tiny one can use a mix of simulation and analytic calculations as was done by gelman king and boscardin 1998 4 ii method we use a state by state election forecast computed on october 24 2008 based on the latest opinion polls silver 2008 earlier in the campaign polls are not particularly informative and it is better to use regression based forecasts at least to account for possible national swings see lock and gelman 2008 and for further discussion wlezien and erikson 2004 and the references therein by late october however polls are close to the actual election outcome and so it is reasonable to construct a forecast distribution using poll aggregation 5 the result of our forecasts is a 10 000 x 51 matrix representing 10 000 computer simulations of the election with each simulation including the vote margin for obama e g a margin of 0 208 in alabama corresponds to obama and mccain receiving 60 4 and 39 6 respectively of the two party vote in the state we convert this percentage to a numerical vote margin by multiplying by the voter turnout in the state which we estimate by taking the two party turnout from 2004 and adding 4 corresponding to population increase and another 4 to account for an anticipated increase in turnout this year 6 as discussed earlier the simulations for the states are correlated the joint probability distribution of the 51 election outcomes includes uncertainty about the national swing as well as state by state fluctuations

the provision of public goods under alternative electoral incentives politicians who care about the spoils of office may underprovide a public good because its benefits cannot be targeted to voters as easily as pork barrel spending we compare a winner take all system where all the spoils go to the winner to a proportional system where the spoils of office are split among candidates proportionally to their share of the vote in a winner take all system the public good is provided less often than in a proportional system when the public good is particularly desirable we then consider the electoral college system and show that it is particularly subject to this inefficiency

social security retirement age and optimal income taxation it is often argued that implicit taxation on continued activity of elderly workers is responsible for the widely observed trend towards early retirement in a world of laissez faire or of first best efficiency there would be no such implicit taxation the point of this paper is that when first best redistributive instruments are not available because some variables are not observable the optimal policy does imply a distortion of the retirement decision consequently the inducement of early retirement may be part of the optimal tax transfer policy we consider a model in which individuals differ in their productivity and their capacity to work long and choose both their weekly labor supply and their age of retirement we characterize the optimal non linear tax transfer that maximizes a utilitarian welfare function when weekly earnings and the length of active life are observable while individuals productivity and health status are not observable c 2003 elsevier b v all rights reserved

delegation and threat in bargaining abstract two principals nations appoint one agent each to bargain over the provision of a public good two institutional set ups are studied each with a different level of authority given to the agents here authority means the right to decide the own side s provision if negotiations break down in equilibrium the principals choose agents with preferences differing from their own the low authority equilibrium pareto dominates with regard to the principals the case of the principals deciding on the provisions simultaneously autarchy the high authority equilibrium is pareto dominated by the low authority equilibrium and it may even be dominated by autarchy journal of economic literatureclassification numbers c71 and c72

cross border externalities and cooperation among representative democracies abstract this paper analyzes the provision of public goods with cross border externalities by representative democracies the level of provision of each country is decided by a policy maker elected by majority rule at the country level we compare the case in which policy makers set their policies noncooperatively with the case in which they set their policies through coasian cooperation cooperation induces policy makers to internalize cross border externalities but it also induces strategic voters to elect a policy maker who cares less about the public good to reduce their public good contribution the former effect increases public good provision while the latter reduces it we show that once voters incentives are taken into account whether cooperation is beneficial depends neither on voters preferences nor on the magnitude of spillovers nor on the size bargaining power or efficiency of each country instead it depends only on the curvature of the demand for the public good cooperation increases decreases public good provision when the demand function is more less convex than the unit elastic demand function hence the desirability of international cooperation depends mostly on the type of public good considered

savings and pensions some uk evidence the sort of problem we shall be interested in is the following how much does a small change in a mature pay as you go pension scheme change aggregate current consumption in the context of a community of workers and pensioners with a variable retirement date and a pension scheme where the government taxes workers to pay pensions two sorts of effects have been posited first changes in pensions re distribute current disposable income this may lead to changes in aggregate consumption the redistribution effect secondly future pension rights constitute a form of wealth and unanticipated changes in the size or composition of wealth holdings may affect current consumption plans wealth effects see gultekin and logue i979 for a survey and references looking at the redistribution effect we observe that if pensioners have a higher short run marginal propensity to consurme than workers and the same long run marginal propensity to consume then an increase in pensions will ceteris paribus raise aggregate consumption initially but cause it to fall in the medium run the long run elasticity will be zero turning to wealth effects we distinguish two principal elements firstly an unanticipated increase in pensions in a pay as you go scheme increases the lifetime income of pensioners and workers close to retirement for workers who intend retiring at pensionable age this will lead to an increase in current consumption so long as it is a normal good this income effect will be less marked for workers at the beginning of their working life since the net income effect may even be negative for many workers as time goes by the aggregate net income effect consequent on a rise in pensions is diminished so that we would expect to see an initial rise in consumption followed by a very slow decline in incremental consumption the long run elasticity of mean consumption with respect to a rise in pensions would be zero note that imperfections in the capital market are unlikely to modify these conclusions since those who wish to increase their consumption are likely to have savings that can be reduced whilst those for whom borrowing constraints are binding i e younger workers are unlikely to wish to increase current consumption by much anyway there are two important caveats to the above the first is that workers who intend to work after the pensionable age may decrease current consumption if the increase in pensions induces a large enough fall in planned post pensionable age labour supply see crawford and lilien i98i for a theoretical discussion

observable contracts strategic delegation and cooperation the role of commitments in noncooperative games is well acknowledged and documented one way to achieve commitments is by letting delegates represent the players of a game in this paper the authors study a delegation game in which the players can use agents strategically to play on their behalf and the contracts they sign with them are common knowledge they show that in such cases every pareto optimal outcome of the game can become the unique subgame perfect nash equilibrium of the delegation game the authors demonstrate this result by discussing the cournot type duopolistic game copyright 1991 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

redistribution pork and elections why might citizens vote against redistributive policies from which they would seem to benefit many scholars focus on wedge issues such as religion or race but another explanation might be geographically based patronage or pork we examine the tension between redistribution and patronage with a model that combines partisan elections across multiple districts with legislation in spatial and divide the dollar environments the model yields a unique equilibrium that describes the circumstances under which poor voters support right wing parties that favor low taxes and redistribution and under which rich voters support left wing parties that favor high taxes and redistribution the model suggests that one reason standard tax and transfer models of redistribution often do not capture empirical reality is that redistributive transfers are a less efficient tool for attracting votes than are more targeted policy programs the model also underlines the central importance of party discipline during legislative bargaining in shaping the importance of redistribution in voter behavior and it describes why right wing parties should have an advantage over left wing ones in majoritarian systems

the effect of social security on labor supply a cohort analysis of the notch generation this article uses aggregate birth year calendar year level data derived from the current population survey cps to estimate the effect of social security wealth on the labor supply of older men in the 1970s and 1980s the analysis focuses on measuring the impact of the 1977 amendments to the social security act which created a substantial unanticipated reduction in social security wealth for individuals born after 1916 this differential in benefits has become known as the benefit notch results indicate that labor supply continued to decline for the notch babies who received lower social security benefits than earlier cohorts

the impact of age pension eligibility age on retirement and program dependence evidence from an australian experiment abstract governments around the world are reforming their social security systems in light of the challenges posed by population aging we study the 1993 australian age pension reform which progressively increased the eligibility age for women from 60 to 65 years we find economically significant responses to the reform an increase in the eligibility age of one year induced a decline in the probability of retirement by 12 to 19 percentage points in addition the reform induced significant program substitution with increases in enrollment in other social insurance programs particularly the disability support pension which effectively functioned as an alternative source of retirement income

the economics of split ticket voting in representative democracies in u s elections voters often vote for candidates from different parties for president and congress voters also express dissatisfaction with the performance of congress as a whole and satisfaction with their own representative the authors develop a model of split ticket voting in which government spending is financed by uniform taxes the benefits from this spending are concentrated while the model generates split ticket voting overall spending is too high only if the president s powers are limited overall spending is too high in a parliamentary system the authors model can be used as the basis of an argument for term limits copyright 1997 by american economic association

social security and private saving a reconsideration of the assumptions whether social security discourages private saving has been the focus of an ongoing debate since feldstein s 1974 paper on that paper he assumes that people expect after retirement social security benefits to increase at an annual real rate of 2 in this paper using a wide sample of cross section data we estimate people expected real rate of growth of after retirement social security benefits the estimates range between 0 63 and 0 76 depending on the specification used the obtained estimates are far different from the 2 imposed ad hoc by feldstein these estimates will presumably imply lower values of the social security wealth variable this casts a serious doubt on the strong depressing effect of social security on private saving

time to retire the effect of state fiscal policies on retirement decisions our research addresses the importance of state fiscal policies on the probability of retirement using a panel of individual tax return data results indicate that a one percentage point increase in the income or sales tax rate reduces the probability of retirement by about 8 7 percent the evidence suggests that state spending might also affect retirement decisions but magnitudes are inconclusive in general the results suggest that the income effect dominates that is higher tax rates at the state level reduce disposable income and decrease the probability of retiring results are similar in models examining single and married filers separately

the economic effects of social security toward a reconciliation of theory and measurement abstract in this paper we argue that actuarial valuation of social security benefit streams is theoretically inconsistent with the assumption of pure life cycle motives instead we show that the simple discounted value of future benefits ignoring the possibility of death is often a good approximation to the relevant concept of value this observation motivates a re examination of existing empirical evidence concerning the economic effects of social security we focus our attention on studies of distributional equity and personal saving behavior in both cases we argue that the use of simple rather than actuarial discounting of survival contingent income streams produces results that differ dramatically from previous findings specifically estimates based on actuarial valuation may overstate the importance of redistribution between and within generations and may understate the depressive effect of social security on personal wealth accumulation by a factor of three or more

the effect of access to post retirement health insurance on the decision to retire early the authors analyze the effect of the availability of post retirement health insurance on early retirement behavior of men using data from the 1984 1986 and 1988 panels of the survey of income and program participation sipp they extend previous static models of retirement to account for access to health insurance as a factor in the retirement decision the estimates from probit models of retirement during the sipp panel period show that the offer of continued employer provided health insurance coverage after retirement increased the likelihood of retirement before age 65 also the authors find evidence that the presence before retirement of retirement insurance coverage through a source in addition to the employer increased the likelihood of early retirement

can social security explain trends in labor force participation of older men in the united states after a long decline the labor force participation rate lfpr of older men in the united states leveled off in the 1980s and began to increase in the late 1990s we examine how changes in social security rules affected these trends we attribute only a small portion of the decline from the 1960s 80s to the increasing generosity of social security over this period increases in the full retirement age and the delayed retirement credit explain one quarter to one half of the recent increase in the lfpr increasing educational attainment and increasing lfpr of married women also contributed to the recent rise

do retirement dreams come true the effect of unanticipated events on retirement plans analyzing data from the retirement history study the authors find that the retirement plans of male workers aged 58 63 in 1969 were significantly affected by unanticipated events over the next decade specifically unanticipated increases in social security wealth induced retirement earlier than originally planned as did deterioration in personal health whereas the recession of the 1970s tended to delay retirement this evidence that policy changes do affect retirement behavior in systematic ways provides support for the decision by congress to defer until the turn of the century the application of several important provisions of the 1983 amendments to the social security act

are political statements only expressive an experiment abstract many forms of political communication are thought to be expressive rather than instrumental we present evidence suggesting the presence of a perceived instrumental benefit of individual political communication subjects may send a sometimes costly comment on another person s choice of how to donate to two rival political groups subjects who may comment before the choice is made when they may have some persuasive impact are more than twice as likely to comment as those who may only send a message after the decision when the timing of the messages pre or post decision remains fixed but the experimenter alone receives the message there is no difference in the proportion of messages sent pre and post decision moreover most of the comments made to the decision maker prior to the decision use an imperative construction while few do so after the decision is made or when writing to the experimenter alone taken together these results indicate that political expression is both expressive and instrumental

the political economy of benefits and costs a neoclassical approach to distributive politics this essay offers a rational political explanation for the notorious inefficiency of pork barrel projects with an optimization model of legislative behavior and legislative institutions the model emphasizes the economically arbitrary from a welfare point of view importance of the geographic incidence of benefits and costs owing to the geographic basis for political representation we explore the implications of a legislator s objective function and derive conditions under which a representative legislature will select an omnibus of projects each of which exceeds the efficient scale

social security liquidity and early retirement abstract this paper investigates the effect of social security on retirement decisions it argues that it is important to take realistic account of how recipients evaluate potential benefit flows the paper presents a simple retirement model in which liquidity constraints prompt individuals to use higher than market discount rates in evaluating future pension benefits as a consequence even an apparently actuarially fair early retirement benefit could on average discourage continued work using data on individual retirement decisions i find support for the argument that this phenomenon contributes to some of the observed increase in early retirement

expressive voting and government redistribution testing tullock s charity of the uncharitable models of expressive voting postulate that voters will consume ideological stances on issues by voting for them even when they are against the voter s own narrow selfinterest if the probability of being a decisive voter is low when a voter is unlikely to sway the outcome the odds that avoter will incur any real personal cost a higher tax burden for example from her own expressive vote is small we testand find support for tullock s straightforward empiricalimplication of this model that government welfare transfer payments are inversely related to the probability of being thedecisive voter

a dynamic theory of public spending taxation and debt this paper presents a dynamic political economy theory of public spending taxation and debt policy choices are made by a legislature consisting of representatives elected by geographically defined districts the legislature can raise revenues via a distortionary income tax and by borrowing these revenues can be used tofinance a national public good and district specific transfers interpreted as pork barrel spending the value of the public good is stochastic reflecting shocks such as wars or natural disasters in equilibrium policy making cycles between two distinct regimes business as usual in which legislators bargain over the allocation of pork and responsible policy making in which policies maximize the collective good transitions between the two regimes are brought about by shocks in the value of the public good in the long run equilibrium tax rates are too high and too volatile public good provision is too low and debt levels are too high in some environments a balanced budget requirement can improve citizen welfare

early retirement provisions and the labor force behavior of older men evidence from canada we examine the sequential introduction of early retirement provisions to canada s two public pension plans these reforms provide a unique opportunity to assess the effect of public pension plan parameters on labor supply behavior free of the biases that potentially affect the simple time series or cross section inference presented in many previous studies we find that the reforms led to an increase in pension receipt but had little immediate effect on labor market behavior this is due to the fact that men who initially took advantage of the early retirement provisions would otherwise have had limited labor market participation

social security benefits consumption expenditure and the life cycle hypothesis this paper examines the impact of changes in social security benefits on aggregate consumption expenditure under the null hypothesis there should be no contemporaneous effect at the monthly frequency because increases in benefits have always been announced at least 6 weeks prior to payment the paper develops overwhelming evidence contrary to the null that benefits have affected aggregate spending the results have strong implications for several important issues including ricardian equivalence government policy irrelevance and the excess sensitivity of consumption to changes in income

delegation effects in representative democracies do they foster extremism abstract we analyze the political equilibria of a model of representative democracy with strategic delegation where the policy which maximizes ex ante the welfare of a citizen is not in general the one he would select ex post if he were elected we show that these effects give rise to an abstention effect which is likely to lead to the unopposed election of extremist representatives and prevents policy convergence in two candidate elections

everyone likes a winner an empirical test of the effect of electoral closeness on turnout in a context of expressive voting under instrumental voting closer elections are expected to have higher turnout under expressive voting however turnout may increase with decreasing closeness when voters have a preference for winners an empirical test using data on belgian municipal elections supports this we find that turnout reaches a local maximum when the largest party in the election obtains just over 52 of the seats and then falls supporting the instrumental closeness argument there is however another turning point the presence of a highly dominating party receiving at least two thirds of the votes stimulates turnout despite the fact that dominance implies lower closeness

majority rule bargaining and the under provision of public investment goods abstract despite evidence that modern democracies systematically shortchange public investment goods relatively little theoretical work exists to explain this phenomenon we build on baron and ferejohn s american political science review 83 4 1989 1181 1206 bargaining model to describe public investments in a setting of budgetary politics specifically we show that underinvestment inherently arises from distributive politics within a majoritarian institution the inability of current majorities to contract with future ones drives a wedge between spending on consumption today and investing for future consumption extensions to the model demonstrate that earmarking future returns to specific players and or detaching consumption from investment decisions yields more efficient levels of public investment

economic determinants of workers retirement decisions economic determinants of workers retirement decisions the landscape for older workers has changed dramatically in recent decades governments have made cuts to public pension programs private pensions have shifted from defined benefit to defined contribution plans equity and housing markets have been unusually volatile and workers have experienced declining morbidity and mortality at the same time the labor force participation rate for older men and women has been rising over the past two decades implying later retirement are these phenomena related this paper reviews the large and growing body of literature exploring the economic determinants of workers retirement decisions including public and private pensions wealth and savings health and health insurance and labor demand

greasing the wheels pork and public goods contributions in a legislative bargaining experiment abstract when a legislature bargains over funds for pork and public goods and the funds come from a common budget increased spending on the public good means greater payoff equality since it comes at the expense of pork this paper explores whether inequity aversion then leads to greater public goods spending using both theory and a laboratory experiment we show inequity aversion generally decreases inequity within a coalition by limiting proposer power however this does not always mean greater public goods contributions because the types of proposals passed change in equilibrium in addition the experiment investigates the theoretical prediction that increasing players relative preference for pork can increase public goods contributions we show that while average public goods contributions remain unchanged there is evidence at the individual level that subjects hold out for higher public goods contributions as predicted

the right type of legislator a theory of taxation and representation abstract we develop a theory of taxation and the distribution of government spending in a citizen candidate model of legislatures individuals are heterogeneous in two dimensions productive ability in the private sector and negotiating ability in politics when these are positively correlated rich voters always prefer a rich legislator but poor voters face a trade off a rich legislator will secure more pork for the district but will also prefer lower taxation than the poor voter our theory organizes a number of stylized facts across countries about taxation and redistribution parties and class representation in legislatures we demonstrate that spending does not necessarily increase when the number of legislators increases as the standard common pool intuition suggests and that many policies aimed at increasing descriptive representation may have the opposite effect

secular changes in the work and retirement patterns of older men this paper examines trends in the work and retirement patterns of males aged 58 to 63 in 1969 and 1989 respectively the labor force attachments of this group have fallen for reasons unrelated to changes in individual characteristics or occupational attainment especially sharp reductions at age 62 hint at an increasingly important role for the early retirement provisions in social security attachments to longest jobs have also declined substantially beginning at age 55 although pension incentives may be significant the observed correlations between pensions and employment status may also reflect the role of confounding factors such as poorly measured nonpension wealth

language and government coordination an experimental study of communication in the announcement game one of the key roles of government is to coordinate the activities of citizens one reason why governments are efficient facilitators of coordinated action in addition to their ability to force compliance or tax is that they are typically endowed with more information than the individuals they govern this advantage creates a dilemma for them however since it forces them to decide on how they should distribute the information in their possession to the population this paper investigates this question we investigate the announcement game defined by the government and those it governs and focus on communication strategy that government uses to communicate private information to the citizens this communication strategy involves 1 partitioning the state space in an attempt to mask the true state of the world and 2 choosing what type of language to use in order to communicate elements of this partition we present evidence that the language used to execute a communication strategy does affect the efficiency of the equilibrium convergence process and also demonstrate that subjects playing the role of the government exhibit a great deal of sophistication in the communication strategies they employ and the language they use to execute them

moral bias in large elections theory and experimental evidence in this article we provide evidence that voters in large elections tend to vote against their material self interest and to vote for a morally or ethically appealing alternative it may seem puzzling that voters might behave differently in small elections than they do in large ones however we show that such behavior is a logical consequence of voters having a conflict between obtaining a better material outcome and choosing a moral action we develop a simple model of this conflict and show that decreasing the probability that a single vote is decisive i e pivot probability reduces the importance of outcomes relative to actions in voter decision making because pivot probability is generally small in large elections alternatives that are understood by voters to be morally superior are more likely to win in large elections than in small ones thus compared to the preferences of voters election results will be biased in favor of moral alternatives 1 the model produces a set of predictions that we test in a laboratory experiment to clarify ideas consider a situation in which two outcomes are possible a and b assume that b gives

an experimental study of expressive voting in this paper we report results of an initial attempt to test the theory of expressive voting our experiment involves requiring subjects to vote between receiving a in cash or having b donated to charity on their behalf across subjects we vary the probability that their vote will decide which disbursement is made as the probability of being decisive is lowered the opportunity cost of giving expression to charitable sentiment decreases hence the likelihood of voting in accordance with such sentiment is expected to increase we find weak support for the hypothesis but the results do not replicate when we alter the parameter settings limitations of our design are discussed

pensions and retirement evidence from union army veterans i investigate the factors that fostered rising retirement rates prior to social security and most private sector pensions by estimating the income effect of the first major pension program in the united sates that covering union army veterans the elasticity of nonparticipation with respect to union army pension income was 0 73 the findings suggest that secularly rising income explains a substantial part of increased retirement rates comparisons with elasticities of nonparticipation with respect to social security income suggest that the elasticity of labor force nonparticipation may have decreased with time perhaps because of the increasing attractiveness of leisure

strategic delegation and voting rules abstract the selection of political representatives depends on the political system principals such as voters or districts may benefit by strategically electing representatives different from themselves while a status quo biased delegate may be a better negotiator an enthusiastic representative has a better chance of being included in the majority coalition a larger majority requirement leads to conservative delegation and hence a status quo bias a poor minority protection does the opposite through strategic delegation the political system also determines whether centralization or decentralization is beneficial

fair retirement under risky lifetime a premature death unexpectedly brings a life and a career to their end leading to substantial welfare losses we study the retirement decision in an economy with risky lifetime and compare the laissez faire with egalitarian social optima we consider two social objectives 1 the maximin on expected lifetime welfare allowing for a compensation for unequal life expectancies and 2 the maximin on realized lifetime welfare allowing for a compensation for unequal lifetimes the latter optimum involves in general decreasing lifetime consumption profiles as well as raising the retirement age this result is robust to the introduction of unequal life expectancies and unequal productivities

long term changes in the economic activity of older males in korea abstract this study estimates the labor force participation rate lfpr of older males in korea from 1955 through 2000 and analyzes the effects of several determining factors on labor force participation decisions at older ages the lfpr of men age 60 and older increased substantially from the mid 1960s to the late 1990s this pattern is in sharp contrast to the historical experiences of most other oecd countries where the lfpr of older males declined rapidly over the last century the rise in the lfpr of older males in korea between 1965 and 1995 is largely explained by the dramatic increase in the labor market activity of the rural elderly population the results of regression analyses suggest that the acceleration of population aging in rural areas as a result of the selective out migration of younger persons was the major cause of the sharp increase in the lfpr of older males it is likely that the relative decline of the rural economy in the course of industrialization made it increasingly difficult

voting when money and morals conflict an experimental test of expressive voting abstract moral considerations may matter much in voting because the costs of expressing support for a morally worthy cause may be low in a referendum these costs depend on whether a voter expects to affect the outcome of the referendum to test the low cost theory of expressive voting we experimentally investigate a proposal to tax everyone and to donate tax revenues the analysis of expectations and voting decisions shows that the low cost theory fails to explain voting decisions instead we find that voters tend to approve of the proposal if they expect others to approve too

are hypothetical referenda incentive compatible a comment in a recent article in this journal cummings al 1997 offer experimental evidence rejecting the hypothesis that a hypothetical referendum is an incentive compatible mechanism for obtaining the social value of or willingness to pay for changes in the allocation of environmental goods and services while cautions in offering a blanket rejection of hypothetical referenda as a means of measuring economic values on the basis of their findings the authors do suggest that at least in experimental settings respondents appear to behave differently when real money is changing hands wheather hypothetical situations adequately mimic real market situations has been debated in the contigent valuation literature since its inception see cummings brookshire and schulze 1986 cummings et al s finding of incentive incompatibility appears to offer strong evidence for the critics of hypothetical referenda

how social security and medicare affect retirement behavior in a world of incomplete markets this paper provides an empirical analysis of how the u s social security and medicare insurance system affect the labor supply of older males in the presence of incomplete markets for loans annuities and health insurance we estimate a detailed dynamic programming dp model of the joint labor supply and social security acceptance decision focusing on a sample of males in the low to middle income brackets whose only pension is social security the dp model delivers a rich set of predictions about the dynamics of retirement behavior and comparisons of actual vs predicted behavior show that the dp model is able to account for wide variety of phenomena observed in the data including the pronounced peaks in the distribution of retirement ages at 62 and 65 the ages of early and normal eligibility for social security benefits respectively we identify a significant fraction of health insurance constrained individuals who have no form of retiree health insurance other than medicare and who can only obtain fairly priced private health insurance via their employer s group health plan the combination of significant individual risk aversion and a long tailed pareto distribution of health care expenditures implies that there is a significant security value for these individuals to remain employed until they are eligible for medicare coverage at age 65 overall our model suggests that a number of heretofore puzzling aspects of retirement behavior can be viewed as artifacts of particular details of the social security rules whose incentive effects are especially strong for lower income individuals and those who do not have access to fairly priced loans annuities and health insurance

bargaining in legislatures over particularistic and collective goods we develop a bargaining model in which a legislature divides a budget among particularistic and collective goods by incorporating both private and public goods in a unified model we uncover nonmonotonic relationships between legislative preferences for collective spending and the amount of the budget actually allocated to collective goods put simply policy proposers can exploit coalition partners strong preferences for public goods to actually provide fewer public goods in equilibrium while directing more private goods to themselves these results explain why policy reforms to limit special interest spending often fail this unified model also sheds new light on when legislatures prefer open or closed amendment rules and when coalitions take different sizes and shapes

strategic delegation in a legislative bargaining model with pork and public goods abstract this paper examines the incentives of voters to appoint legislators with different preferences from their own the paper adopts an underlying legislative bargaining model proposed by volden and wiseman 2007 in which legislators with heterogeneous preferences divide a fixed budget between a public good and pork projects local public goods we show that voters have an incentive to strategically delegate to affect how the budget is divided at the legislative level when voters preferences for pork are not too strong the incentives for strategic delegation exist to appoint representatives who will direct more money to the public good and not to pork projects this generally results in at least as many representatives as districts that favor the public good the comparative statics predict that when strategic delegation occurs increasing the size of the legislature increases the fraction of the budget spent on the public good

immigration and pension benefits in the host country this paper examines the role that low skilled immigration plays in determining pension benefits of the host population with an overlapping generations model which allows identifying which groups of native population are in favour or against immigration we find that despite immigrants having low average productivity an open borders policy would be implemented since most of current domestic cohorts gain from immigration only younger workers might be against immigration since they will coincide with immigrants in their retirement periods moreover we show how a larger immigrant quota would increase the probability of a pareto improvement for the current domestic population