[en] This paper studies the design of nonlinear social security schemes when individuals differ in
productivity and in their degree of myopia. Myopic individuals may not save ‘‘enough’’ for
their retirement. The welfare function is paternalistic: The rate of time preference of the
farsighted is used for both types. We show that the solution does not necessarily imply forced
savings for the myopics: Paternalistic considerations are mitigated by incentive effects.
Numerical results suggest that as the proportion of myopic individuals increases, there is less
redistribution and more forced saving, and the desirability of social security increases.
Research center :
CREPP - Centre de Recherche en Économie Publique et de la Population - ULiège
Disciplines :
Economic systems & public economics
Author, co-author :
Cremer, Helmuth; Toulouse School of Economics
De Donder, Philippe; Toulouse School of Economics
Maldonado, Dario; Universidad del Rosario, Bogota, Colombia
Pestieau, Pierre ; Université de Liège - ULiège > HEC-Ecole de gestion > HEC-Ecole de gestion
Language :
English
Title :
Forced Saving, Redistribution, and Nonlinear Social Security Schemes
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