Social Security: The Trust Fund

The Social Security program pays benefits to retired or disabled workers and their family members, and to family members of deceased workers. Program income and outgo are accounted for in two separate trust funds authorized under Title II of the Social Security Act: the Federal Old-Age and Survivors Insurance (OASI) trust fund and the Federal Disability Insurance (DI) trust fund. This report refers to the two trust funds as an aggregate Social Security trust fund and discusses the operations of the OASI and DI trust funds on a combined basis. This report covers the basics of how the Social Security program is financed and how the Social Security trust fund works. It will be updated annually to reflect current projections of the financial status of the Social Security trust fund

Social Security: What Would Happen If the Trust Funds Ran Out?

[Excerpt] Each year when the Social Security trustees release their annual report, attention is focused on the projection of the year that the Social Security trust funds will become insolvent. In their 2014 report, the Trustees projected that, under their intermediate assumptions and under current law, the Disability Insurance (DI) trust fund will become exhausted in 2016 and the Old-Age and Survivors Insurance (OASI) trust fund will do so in 2034. Although the two funds are legally separate, they are often described in combination. The trustees project that the combined Social Security trust funds will become exhausted in 2033. Some Americans may believe that if the trust funds were exhausted, Social Security would be unable to pay any benefits. In fact, in 2033, the first year of projected insolvency of the combined Social Security trust funds, the program is projected to have enough tax revenue to pay about 77% of scheduled benefits; that percentage would decline to 72% by the end of the 75-year projection period. Although benefits would be paid in some form, it is unclear how the necessary reductions would be implemented, because the Social Security Act does not specify what would happen to benefits if a trust fund became exhausted. One option would be to pay full benefit checks on a delayed schedule; another would be to make timely but reduced payments. This report explains what the Social Security trust funds are and how they work. It describes the historical operations of the trust funds and the Social Security trustees’ projections of future operations. It explains what could happen if Congress allowed the trust funds to run out. It also analyzes two scenarios that assume Congress waits until the moment of insolvency to act, showing the magnitude of benefit cuts or tax increases needed and how such changes would affect beneficiaries

Social Relationships and Trust

While social relationships play an important role for individuals to cope with missing market institutions, they also limit individuals' range of trading partners. This paper aims at understanding the determinants of trust at various social distances when information asymmetries are present. Among participants from an informal housing area in Cairo we find that the increase in trust following a reduction in social distance comes from the fact that trustors are much more inclined to follow their beliefs when interacting with their friend. When interacting with an ex-ante unknown agent instead, the decision to trust is mainly driven by social preferences. Nevertheless, trustors underestimate their friend's intrinsic motivation to cooperate, leading to a loss in social welfare. We relate this to the agents' inability to signal their trustworthiness in an environment characterized by strong social norms.Trust, hidden action, social distance, solidarity, reciprocity, economic development

Trust and Social Collateral

This paper builds a theory of informal contract enforcement in social networks. In our model, relationships between individuals generate social collateral that can be used to control moral hazard when agents interact in a borrowing relationship. We define trust between two agents as the maximum amount that one can borrow from the other, and derive a simple reduced form expression for trust as a function of the social network. We show that trust is higher in more connected and more homogenous societies, and relate our trust measure to commonly used network statistics. Our model predicts that dense networks generate greater welfare when arrangements typically require high trust, and loose networks create more welfare otherwise. Using data on social networks and behavior in dictator games, we document evidence consistent with the quantitative predictions of the model.

Does Social Capital Create Trust? Evidence from a Community of Entrepreneurs

Which kind of social capital fosters the diffusion of development-oriented trust? This paper carries out an empirical investigation into the causal relationships connecting four types of social capital (i.e. bonding, bridging, linking, and corporate), and different forms of trust (knowledge-based trust, social trust, trust towards public services and political institutions), in a community of entrepreneurs located in the Italian industrial district of the Tuscia. Our results suggest that the main factors fostering the diffusion of social trust among entrepreneurs are the perception that the local community is a safe place, and the establishment of corporate ties through professional associations. Trust in people is positively and significantly correlated also to higher levels of satisfaction and confidence in public services. Participation in voluntary organizations does not appear to increase trust in people. Rather, we find evidence of the other way round: interpersonal trust seems to encourage civic engagement.Trust, Social capital, Safety, Professional associations, Entrepreneurship, Corporate ties, Group and Interpersonal Processes, Social Perception and Cognition

Does social capital create trust? Evidence from a community of entrepreneurs

Which kind of social capital fosters the diffusion of development-oriented trust? This paper carries out an empirical investigation into the causal relationships connecting four types of social capital (i.e. bonding, bridging, linking, and corporate), and different forms of trust (knowledge-based trust, social trust, trust towards public services and political institutions), in a community of entrepreneurs located in the Italian industrial district of the Tuscia. Our results suggest that the main factors fostering the diffusion of social trust among entrepreneurs are the perception that the local community is a safe place, and the establishment of corporate ties through professional associations. Trust in people is positively and significantly correlated also to higher levels of satisfaction and confidence in public services. Participation in voluntary organizations does not appear to increase trust in people. Rather, we find evidence of the other way round: interpersonal trust seems to encourage civic engagementTrust, Social capital, Safety, Professional associations, Entrepreneurship, Corporate ties, Group and Interpersonal Processes, Social Perception and Cognition

SOCIAL TRUST AND DAIRY CATTLE FARMING CASE STUDY : DAIRY CATTLE FARMERS IN GETASAN VILLAGE, CENTRAL JAVA PROVINCE

ABSTRACT The study aimed to analyze the relationship between social trust and performance of dairy cattle farming in Semarang Regency, Central Java. The study was conducted in Getasan Village, Getasan District, Semarang Regency, Central Java, Indonesia. The sample size in this study was 96. The information gathered from the respondent’s interview via questionnaire were coded and processed using the (SPSS) and were analyzed quantitatively to the possible extent using descriptive statistics such as frequency distribution, mean, and percentage. The Spearman Rank Order Correlation test was used to determine the relationship between social trust and the performance of dairy cattle farming. This study indicates that the is significant relationship between social trust and performance of dairy cattle farming. The indicators of social trust could influence an organization and its members to improve the performance of dairy cattle farming. This study also proposed some recommendation. The government agents should be more careful in their contacts with rural communities and should avoid activities that can reduce the level of trust. Key Words : social trust, dairy cattle farmer

Social Trust, Cooperation, and Human Capital

The importance of social trust on economic growth has been suggested by many empirical works. This paper formalizes the concept of social trust and studies its formation process in a game theoretic setting. It provides plausible explanations for a wide range of empirical and experimental findings. The main results of the paper are as follows. For utility-maximizing players, cooperation arises in one-period prisoner’s dilemmas if and only if there is social trust. The amount of social trust in a given game is determined by the distribution of players’ cooperative tendency. Cooperative tendency is in essence a component of human capital distinct from cognitive ability. Its investment, however, is typically not efficient because the social returns are always strictly larger than individual returns. This positive investment externality leads to multiple equilibria in social trust formation, but a unique stable equilibrium may also exist. The different effects of legal institutions, information structure and education programs on social trust are also investigatedsocial trust, cooperative tendency, prisoner's dilemma