Is Social Security behind the Collapse of Personal Saving?

This paper considers the quantitative role of growth in the size of the social security program in contributing to the collapse of personal saving in the U.S. over the last few decades. Using a calibrated, general equilibrium life-cycle model this paper shows that social security may not be to blame. Specifically, the model predicts that a 50-percent increase in the social security tax rate (as in the U.S. over the last half century) produces a modest decline in the personal saving rate from 10 percent down to 9.6 percent. This result runs counter to some popular opinion.NIPA personal saving rate, social security, life-cycle permanent-income model, general equilibrium calibration

Public health insurance and entry into self-employment

We estimate the impact of a differential treatment of paid employees versus self-employed workers in a public health insurance system on the entry rate into entrepreneurship. In Germany, the public health insurance system is mandatory for most paid employees, but not for the selfemployed, who usually buy private health insurance. Private health insurance contributions are relatively low for the young and healthy, and until 2013 also for males, but less attractive at the other ends of these dimensions and if membership in the public health insurance allows other family members to be covered by contribution-free family insurance. Therefore, the health insurance system can create incentives or disincentives to starting up a business depending on the family’s situation and health. We estimate a discrete time hazard rate model of entrepreneurial entry based on representative household panel data for Germany, which include personal health information, and we account for non- random sample selection. We estimate that an increase in the health insurance cost differential between self-employed workers and paid employees by 100 euro per month decreases the annual probability of entry into selfemployment by 0.38 percentage points, i.e. about a third of the average annual entry rate. The results show that the phenomenon of entrepreneurship lock, which an emerging literature describes for the system of employer provided health insurance in the USA, can also occur in a public health insurance system. Therefore, entrepreneurial activity should be taken into account when discussing potential health care reforms, not only in the USA and in Germany

Factors affecting glomerular filtration rate, as measured by iohexol disappearance, in men with or at risk for HIV infection

Objective: Formulae used to estimate glomerular filtration rate (GFR) underestimate higher GFRs and have not been well-studied in HIV-infected (HIV(+)) people; we evaluated the relationships of HIV infection and known or potential risk factors for kidney disease with directly measured GFR and the presence of chronic kidney disease (CKD). Design: Cross-sectional measurement of iohexol-based GFR (iGFR) in HIV(+) men (n = 455) receiving antiretroviral therapy, and HIV-uninfected (HIV(-)) men (n = 258) in the Multicenter AIDS Cohort Study. Methods: iGFR was calculated from disappearance of infused iohexol from plasma. Determinants of GFR and the presence of CKD were compared using iGFR and GFR estimated by the CKD-Epi equation (eGFR). Results: Median iGFR was higher among HIV(+) than HIV(-) men (109 vs. 106 ml/min/1.73 m2, respectively, p = .046), and was 7 ml/min higher than median eGFR. Mean iGFR was lower in men who were older, had chronic hepatitis C virus (HCV) infection, or had a history of AIDS. Low iGFR (≤90 ml/min/1.73 m2) was associated with these factors and with black race. Other than age, factors associated with low iGFR were not observed with low eGFR. CKD was more common in HIV(+) than HIV(-) men; predictors of CKD were similar using iGFR and eGFR. Conclusions: iGFR was higher than eGFR in this population of HIV-infected and -uninfected men who have sex with men. Presence of CKD was predicted equally well by iGFR and eGFR, but associations of chronic HCV infection and history of clinically-defined AIDS with mildly decreased GFR were seen only with iGFR. © 2014 Margolick et al

Time-inconsistent preferences and social security: Revisited in continuous time

Imrohoroglu et al. (2003) prove that it is impossible in a three period partial equilibrium model for social security to improve the welfare of a naive quasi-hyperbolic agent if the program has a negative net present value. This paper first generalizes their impossibility theorem to a continuous time setting and then proves analytically that no discount function exists that can rationalize a social security program with a negative net present value.Time inconsistency Social security

Myopia and pensions in general equilibrium

The US social security tax rate has doubled in the last half century.Does the degree of myopic behavior that we observe in the US justify the size of the social security program? To study this question we build a computable general equilibrium model that is composed of life-cycle permanent-income consumers who save optimally and “hand-to-mouth” consumers who just consume their disposable income. Our model is a continuous-time, general equilibrium extension of the model by Cremer et al. (Int Tax Public Financ 15(5):547–562, 2008), though we abstract from the redistributive function of social security to focus on myopia. Retirement is a choice variable in our model and the social security program is designed to mimic the US program in which the annuity value of benefits increases with the retirement age. Also, we allow for delayed claiming beyond the date of retirement. The model matches a variety of important data targets relating to saving and retirement. We find that small reductions in the social security tax rate provide significant welfare gains to both groups of consumers

Optimal Irrational Behavior in Continuous Time

Feigenbaum et al. (2009) showed in a two-period overlapping generations model that households can improve upon the rational, competitive equilibrium while maintaining competitive factor markets if agents coordinate upon an irrational consumption/saving rule. We generalize their findings to continuous time. The optimal consumption rule with coordination implies a U-shaped lifecycle consumption profile. Rational agents living in a standard competitive equilibrium would need a 4% increase of consumption in every period across the lifecycle to reach the level of utility that can be achieved under coordination. Most of this gain can be achieved with a linear saving rule