京都大学 大学院経済学研究科・経済学部

SEMINAR SERIES

Applied Macroeconomics Seminar

Svetlana Pashchenko(Assistant Professor, University of Georgia)

Date&Time:
2019.11.29 (Fri) 16:30‐18:00 
Venue:
Refresh Room on 8F, Faculty of Law and Faculty of Economics East Bldg., Yoshida Campus, Kyoto University
Language:
English
Contact:
Shinichi Nishiyama

Title: "Accounting for Social Security Claim behavior" (with Ponpoje Porapakkarm)

Abstract:
Why do most individuals claim Social Security benefits before the full retirement age? Claiming benefits early results in a substantial reduction in pension income, yet many people claim as early as possible (age 62) or soon thereafter. We show that by answering this question, we can make two additional contributions to the literature. First, the prevalence of early claiming is equivalent to the unwillingness to take up additional Social Security annuity, thus it offers a unique context for studying a well-known annuity puzzle. Since the participation in the Social Security program is compulsory and nearly universal, the low demand for this annuity cannot be attributed to commonly cited market failures such as information frictions. Second, we show that claiming decisions are closely linked to the subjective rate of time preferences and thus can provide a new angle for the identification of this parameter. We provide a quantitative analysis of claiming decisions using a rich structural life-cycle model that matches many important features of the data. We find that the observed claiming behavior can be mostly attributed to a combination of the high rate of time preferences, strong bequest motives, and pre-annuitized wealth. We show that if individuals were rewarded for delaying claiming not with additional annuity income but with equivalent (in present value terms) lump-sum payments, the fraction of early claimers is significantly reduced.

Click here for details of Svetlana Pashchenko

Click here for details of Ponpoje Porapakkarm(Co-author)