Chapter

Key Conclusions about Social Security's Financial Condition and Reform Alternatives

Jagadeesh Gokhale

in Social Security

Published by University of Chicago Press

Published in print April 2010 | ISBN: 9780226300337
Published online February 2013 | e-ISBN: 9780226300368 | DOI: http://dx.doi.org/10.7208/chicago/9780226300368.003.0014
Key Conclusions about Social Security's Financial Condition and Reform Alternatives

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Demographic and Economic Micro Simulation (DEMSIM) shows that constructing Social Security's financial projections gains from modeling key aspects of the economy and demographics, including interactions among them, at the individual and family level. Official evaluations of Social Security reforms focus on the program's solvency over a limited 75-year time horizon without fully revealing their likely impact on different population groups via lifetime actuarial measures and employing sufficient metrics that enable a proper comparative analysis across policy alternatives. This chapter uses an independent methodology and reaches different conclusions from official ones about Social Security's financial condition and the impact of reform options. Its methods are consistent with current Actuarial Standards of Practice. It presents estimates of Social Security's finances under static demographic and economic projections. A reexamination may be warranted after incorporating modifications to DEMSIM's modeling—for example, by calibrating behavioral responses by individuals to changes in future Social Security policies.

Keywords: Social Security; reforms; policies; economy; financial condition

Chapter.  6966 words.  Illustrated.

Subjects: Public Economics

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