Topics in public finance: social security and taxation

Summary The field of public finance focuses on the spending and taxing activities of governments and their influence on the allocation of resources and distribution of income. This work covers in three parts different topics related to public finance which are currently widely discussed in media and politics. The first two parts deal with issues on social security, which is in general one of the biggest spending shares of governments. The third part looks at the main income source of governments by analyzing the perceived value of tax competition. Part one deals with the current problem of increased early retirement by focusing on Switzerland as a special case. Early retirement is predominantly considered to be the result of incentives set by social security and the tax system. But the Swiss example demonstrates that the incidence of early retirement has dramatically increased even in the absence of institutional changes. We argue that the wealth effect also plays an important role in the retirement decision for middle and high income earners. An actuarially fair, but mandatory funded system with a relatively high replacement rate may thus contribute to a low labor market participation rate of elderly workers. We provide evidence using a unique dataset on individual retirement decisions in Swiss pension funds, allowing us to perfectly control for pension scheme details. Our findings suggest that affordability is a key determinant in the retirement decisions. The higher the accumulated pension capital, the earlier men, and to a smaller extent women, tend to leave the workforce. The fact that early retirement has become much more prevalent in the last 15 years is a further indicator of the importance of a wealth effect, as the maturing of the Swiss mandatory funded pension system over that period has led to an increase in the effective replacement rates for middle and high income earners. Part two covers the theoretical side of social security. Theories analyzing optimal social security benefits provide important qualitative results, by mainly using one general type of an economy. Economies are however very diverse concerning numerous aspects, one of the most important being the wealth level. This can lead to significant quantitative benefit differences that imply differences in replacement rates and levels of labor supply. We focus on several aspects related to this fact. In a within cohort social security model, we introduce disability insurance with an imperfect screening mechanism. We then vary the wealth level of the model economy and analyze how the optimal social security benefit structure or equivalently, the optimal replacement rates, changes depending on the wealth level of the economy, and if the introduction of disability insurance into a social security system is preferable for all economies. Second, the screening mechanism of disability insurance and the threshold level at which people are defined as disabled can differ. For economies with different wealth levels, we determine for different thresholds the screening level that maximizes social welfare. Finally, part three turns to the income of governments, by adding an element to the controversy on tax competition versus tax harmonization.2 Inter-jurisdictional tax competition can generate at least two potential benefits or costs: On a public level, tax competition may result in a lower or higher efficiency in the production of public services. But there is also a more private benefit in the form of an option for individuals to move to a community with a lower tax rate in the future. To explore the value citizens attach to tax competition we analyze a unique popular vote for a complete tax harmonization between communities in the third largest Swiss canton, Vaud. Although a majority of voters would have seemingly benefited from replacing the current tax rate by a revenue-neutral average tax rate, the proposal was rejected by a large margin. Our estimates suggest that the estimated combined perceived benefit from tax competition is in the range of 10%.

Comment faire de la surveillance sanitaire? L'exemple de l'Observatoire Valaisan de la Santé en Suisse [How to conduct public health surveillance? The example of the Observatoire Valaisan de la Santé in Switzerland].

OBJECTIVE: To describe the goals and methods of contemporary public health surveillance and to present the activities of the Observatoire Valaisan de la Santé (OVS), a tool unique in Switzerland to conduct health surveillance for the population of a canton. METHODS: Narrative review and presentation of the OVS. RESULTS: Public health surveillance consists of systematic and continuous collection, analysis, interpretation and dissemination of health data necessary for public health planning. Surveillance is organized according to contemporary public health issues. Switzerland is currently in an era dominated by chronic diseases due to ageing of the population. This "new public health" era is also characterized by the growing importance of health technology, rational risk management, preventive medicine and health promotion, and the central role of the citizen/patient. Information technologies provide access to new health data, but public health surveillance methods need to be adapted. In Switzerland, health surveillance activities are conducted by several public and private bodies, at federal and cantonal levels. The Valais canton has set up the OVS, an integrative, regional, and reactive system to conduct surveillance. CONCLUSION: Public health surveillance provides information useful for public health decisions and actions. It constitutes a key element for public health planning.

Cardiovascular disease and the changing face of global public health : a focus on low and middle income countries

Eighty percent of the global 17 million deaths due to cardiovascular disease (CVD) occur in low and middle income countries (LMICs). The burden of CVD and other noncommunicable diseases (NCDs) is expected to markedly increase because of the global aging of the population and increasing exposure to detrimental lifestyle-related risk in LMICs. Interventions to reduce four main risks related to modifiable behaviors (tobacco use, unhealthy diet, low physical activity and excess alcohol consumption) are key elements for effective primary prevention of the four main NCDs (CVD, cancer, diabetes and chronic pulmonary disease). These behaviors are best improved through structural interventions (e.g., clean air policy, taxes on cigarettes, new recipes for processed foods with reduced salt and fat, urban shaping to improve mobility, etc.). In addition, health systems in LMICs should be reoriented to deliver integrated cost-effective treatment to persons at high risk at the primary health care level. The full implementation of a small number of highly cost effective, affordable and scalable interventions ("best buys") is likely to be the necessary and sufficient ingredient for curbing NCDs in LMICs. NCDs are both a cause and a consequence of poverty. It is therefore important to frame NCD prevention and control within the broader context of social determinants and development agenda. The recent emphasis on NCDs at a number of health and economic forums (including the September 2011 High Level Meeting on NCDs at the United Nations) provides a new opportunity to move the NCD agenda forward in LMICs.

Patients' Needs for Care in Public Mental Health: Unity and Diversity of Self-Assessed Needs for Care.

PURPOSE: Needs assessment is recognized to be a key element of mental health care. Patients tend to present heterogeneous profiles of needs. However, there is no consensus in previous research about how patients' needs are organized. This study investigates both general and specific dimensions of patients' needs for care. METHODS: Patients' needs were assessed with ELADEB, an 18-domain self-report scale. The use of a self-assessment scale represents a unique way of obtaining patients' perceptions. A patient-centered psychiatric practice facilitates empowerment as it is based on the patients' personal motivations, needs, and wants. Four seventy-one patients' profiles were analyzed through exploratory factor analysis. RESULTS: A four-factor bifactor model, including one general factor and three specific factors of needs, was most adequate. Specific factors were (a) "finances" and "administrative tasks"; (b) "transports," "public places," "self-care," "housework," and "food"; and (c) "family," "children," "intimate relationships," and "friendship." CONCLUSION: As revealed by the general factor, patients expressing urgent needs in some domains are also more susceptible to report urgent needs in several other domains. This general factor relates to high versus low utilizers of public mental healthcare. Patients also present specific needs in life domains, which are organized in three dimensions: management, functional disabilities, and familial and interpersonal relationships. These dimensions relate to the different types of existing social support described in the literature.