Don’t Raise the Retirement Age! An Experiment on Opposition to Pension Reforms and East-West Differences in Germany

Abstract

For policy reforms to increase a society's welfare, reliable information on people's preferences and expectations is crucial. Representative opinion polls, often involving simplified questions about the complex topics under debate, are an important source of information for both policy-makers and the public. Do people's answers to these poll questions reliably reflect their preferences and expectations, or does fundamental, undiscriminating opposition to reforms distort them? We address this question in the context of a recent German pension reform which raised the statutory retirement age by two years to age 67. By introducing an experiment into a representative household survey, we are able to disentangle expectations of work ability at retirement and fundamental opposition. Our results show that expected work ability declines substantially with increasing target age (63, 65, or 67 years).Answers from West German respondents reflect their current life situation as well as individual health and other risk factors. However, a fundamental opposition to reforms of the welfare state appears to strongly affect responses from East German households.

Intrinsic Work Motivation and Pension Reform Acceptance

“…Thus, it cannot be excluded that intrinsic motivation is linked to a general individual inclination for reform. Furthermore, there is a straightforward alternative story which could explain our key result: It could simply be the case that workers with a physically demanding job are both less intrinsically motivated and, naturally, less optimistic that they would be capable of continuing to work at a higher age (Scheubel et al, 2009). In this case, our result would reflect the impact of job characteristics related to physical stress.…”

“…Consistently, all these groups show a relative low inclination to accept reforms which cut back pensions or lift pension age. Scheubel et al (2009) expand the standard set of self-interest related determinants to the individually expected work ability at pension age and show that this expectation significantly drives the rejection of a higher retirement age.…”

“…8 This specific type of question is particularly useful as it confronts respondents with different reform alternatives which are equally able to improve the sustainability of the payas-you-go system. Surveys which only ask for the acceptance or rejection of one reform option, such as a higher pension age, are confronted with the problem that results could rather reflect general reform willingness than the assessment of the specific reform option (Scheubel et al, 2009). With that ALLBUS question, this is less of a concern and we are able to measure the relative popularity of different reform options independent from the popularity of pension reforms in general.…”

Intrinsic work motivation and pension reform preferences

“…Consistently, all these groups show a relative low inclination to accept reforms, which cut back pensions or lift pension age. Scheubel et al (2009) expand the standard set of self-interest related determinants to the individually expected work ability at pension age and show that this expectation significantly drives the rejection of a higher retirement age.…”

“…Thus, it cannot be excluded that intrinsic motivation is linked to a general individual inclination for reform. Furthermore, there is a straightforward alternative story, which could explain our key result: it could simply be the case that workers with a physically demanding job are both less intrinsically motivated, and naturally, less optimistic that they would be capable of continuing to work at a higher age (Scheubel et al , 2009). In this case, our result would reflect the impact of job characteristics related to physical stress.…”