Forced Saving, Redistribution, and Nonlinear Social Security Schemes

Cremer, Helmuth; Donder, Philippe De; Carrizosa, Darío Maldonado; Pestieau, Pierre

doi:10.4284/sej.2009.76.1.86

Cited by 29 publications

(22 citation statements)

References 12 publications

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“…6 In the parlance of behavioral economics, myopia is really a problem of self control or hyperbolic discounting. To see this, following Kaplow (2006), one can write the choice utility of agents as…”

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confidence: 99%

On myopia as rationale for social security

Andersen

Bhattacharya

2010

Econ Theory

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confidence: 99%

On myopia as rationale for social security

Andersen

Bhattacharya

2010

Econ Theory

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“…Therefore, as long as the government imposes a ‡at rate of sin tax in both periods, the …rst-best optimum is virtually unreachable. 11 The intuition is 10 The experiments designed for testing preferences with self-control problems mostly focus on exploring the degree of people's partial naivete; i.e., people are partially persistent-error and partially dual-self. Few (if not none) have distinguished two types of myopes and to examine which type of myope is more.…”

Section: Absent Sin Goods In the Second Periodmentioning

confidence: 99%

“…See DellaVigna (2009) for a recent survey. 11 A detailed proof is available from the authors upon request.…”

Section: Absent Sin Goods In the Second Periodmentioning

confidence: 99%

Optimal policies for sin goods and health care: Tax or subsidy?

Cheng

Chu

2017

Int Tax Public Finance

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In this paper we examine the optimal policies for sin goods and health care in a two-period economy. Individuals are myopic in the sense that they undervalue the utilities of future consumption and health quality. When investing in health care in the second period, individuals who have previously made myopic decisions may persist in their shortsighted consumption plans (persistent error) or recognize their mistakes (dual self). We show that, for persistent-error myopes, the …rst-best policy mix requires a subsidy on savings and a tax on sin goods. The health care should be taxed (subsidized) if the degree of myopia concerning future consumption is larger (smaller) than that concerning health quality. For dual-self myopes, the optimal policy for sin goods can be either a tax or a subsidy, depending on the relative degrees of myopia and the property of the health quality function.

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“…4 In other words, income, savings and long-term care insurance premiums can be taxed or subsidized and T (y i ; s i ; i ) also includes an individualized lump-sum transfer T i which can be positive or negative. In addition, public long-term care D i can be provided in case of disability.…”

Section: Methodsmentioning

confidence: 99%

Long-term care policy, myopia and redistribution

Cremer

Roeder

2013

Journal of Public Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. This paper examines whether myopia (misperception of the long-term care (LTC) risk) and private insurance market loading costs can justify social LTC insurance and/or the subsidization of private insurance. We use a two-period model wherein individuals differ in three unobservable characteristics: level of productivity, survival probability and degree of ignorance concerning the risk of LTC (the former two being perfectly positively correlated). Terms of use: Documents inThe decentralization of a first-best allocation requires that LTC insurance premiums of the myopic agents are subsidized (at a "Pigouvian" rate) and/or that there is public provision of the appropriate level of LTC. The support for the considered LTC policy instruments is less strong in a second-best setting. When social LTC provision is restricted to zero, a myopic agent's tax on private LTC insurance premiums involves a tradeoff between paternalistic and redistributive (incentive) considerations and we may have a tax as well as a subsidy on private LTC insurance. Interestingly, savings (which goes untaxed in the first-best but plays the role of self-insurance in the second-best) is also subject to (positive or negative) taxation. Social LTC provision is never second-best optimal when private insurance markets are fair (irrespective of the degree of the proportion of myopic individuals and their degree of misperception). At the other extreme, when the loading factor in the private sector is sufficiently high, private coverage is completely crowded out by public provision. For intermediate levels of the loading factors, the solution relies on both types of insurance.JEL-Code: D910, H210, I130.

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Forced Saving, Redistribution, and Nonlinear Social Security Schemes

Cited by 29 publications

References 12 publications

On myopia as rationale for social security

On myopia as rationale for social security

Optimal policies for sin goods and health care: Tax or subsidy?

Long-term care policy, myopia and redistribution

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