Social Security in Theory and Practice (II): Efficiency Theories, Narrative Theories, and Implications for Reform

166 countries have some kind of public old age pension. What economic forces create and sustain old age Social Security as a public program? Mulligan and Sala-i-Martin (1999b) document several of the internationally and historically common features of social security programs, and explore "political" theories of Social Security. This paper discusses the "efficiency theories", which view creation of the SS program as a full of partial solution to some market failure. Efficiency explanations of social security include the "SS as welfare for the elderly" the "retirement increases productivity to optimally manage human capital externalities", "optimal retirement insurance", the "prodigal father problem", the "misguided Keynesian", the "optimal longevity insurance", the "government economizing transaction costs", and the "return on human capital investment". We also analyze four "narrative" theories of social security: the "chain letter theory", the "lump of labor theory", the "monopoly capitalism theory", and the "Sub-but-Nearly-Optimal policy response to private pensions theory". The political and efficiency explanations are compared with the international and historical facts and used to derive implications for replacing the typical pay-as-you-go system with a forced savings plan. Most of the explanations suggest that forced savings does not increase welfare, and may decrease it.

Social spending and demographics: The role of public policies in the intergenerational redistribution of income. Empirical evidence from Spain and Catalonia

The demographic shift underway in Southern Europe requires a revision of some of the fundamental principles of the traditional welfare state. We analyze the evolution of several aspects of welfare and social expenditure over the last two decades. We find that in the context of the present demographic changes and real estate boom current social and pension policy leads to a new distribution of benefits and burdens which is highly intergenerationally unequal. We argue for a revised definition of public policy based on Musgrave's proposition as a possible rule for an intergenerationally fair distribution.

Markups, Gaps, and the Welfare Costs of Business Fluctuations

In this paper we present a simple theory-based measure of the variations in aggregate economic efficiency: the gap between the marginal product of labor and the household s consumption/leisure tradeoff. We show that this indicator corresponds to the inverse of the markup of price over social marginal cost, and give some evidence in support of this interpretation. We then show that, with some auxilliary assumptions our gap variable may be used to measure the efficiency costs of business fluctuations. We find that the latter costs are modest on average. However, to the extent the flexible price equilibrium is distorted, the gross efficiency losses from recessions and gains from booms may be large. Indeed, we find that the major recessions involved large efficiency losses. These results hold for reasonable parameterizations of the Frisch elasticity of labor supply, the coefficient of relative risk aversion, and steady state distortions.

Spinning welfare: The gains from process innovation in cotton and car production

Economists and economic historians want to know how much better life is today than in the past.Fifty years ago economic historians found surprisingly small gains from 19th century US railroads,while more recently economists have found relatively large gains from electricity, computers and cellphones. In each case the implicit or explicit assumption is that researchers were measuring the valueof a new good to society. In this paper we use the same techniques to find the value to society ofmaking existing goods cheaper. Henry Ford did not invent the car, and the inventors of mechanisedcotton spinning in the industrial revolution invented no new product. But both made existing productsdramatically cheaper, bringing them into the reach of many more consumers. That in turn haspotentially large welfare effects. We find that the consumer surplus of Henry Ford s production linewas around 2% by 1923, 15 years after Ford began to implement the moving assembly line, while themechanisation of cotton spinning was worth around 6% by 1820, 34 years after its initial invention.Both are large: of the same order of magnitude as consumer expenditure on these items, and as largeor larger than the value of the internet to consumers. On the social savings measure traditionally usedby economic historians, these process innovations were worth 15% and 18% respectively, makingthem more important than railroads. Our results remind us that process innovations can be at least asimportant for welfare and productivity as the invention of new products.

Transfers, social safety nets and economic growth

The role of social safety nets in the form of redistributional transfersand wage subsidies is analyzed using a simple model of criminal behavior. Itis argued that public welfare programs act as a crime--preventing ordisruption--preventing devices because they tend to increase the opportunitycost of engaging in crime or disruptive activities. It is shown that, in thepresence of a leisure choice, wage subsidies may be better than pure transfers. Using a simple growth model, it is shown that it is not optimal for the governmentto try to fully eliminate crime. The optimal size of the public welfare programis found and it is argued that public welfare should be financed with income(not lump--sum) taxes, despite the fact that income taxes are distortionary.The intuition for this result is that income taxes act as a user fee oncongested public goods and transfers can be thought of as {\it productive}public goods {\it subject to congestion}. Finally, using a cross-section of 75 countries, the partial correlation betweentransfers and growth is shown to be significantly positive.

Putting health in all policies: The National Institute for Welfare Enhancement

Welfare is a rather vague term whose meaning depends on ideology, values andjudgments. Material resources are just means to enhance people s well-being, butgrowth of the Gross Domestic Production is still the standard measure of thesuccess of a society. Fortunately, recent advances in measuring social performanceinclude health, education and other social outcomes. Because what we measureaffects what we do it is hoped that social policies will change. The movementHealth in all policies and its associated Health Impact Assessment methodologywill contribute to it. The task consists of designing transversal policies thatconsider health and other welfare goals, the short term and long-term implicationsand intergenerational redistributions of resources. As long as marginalproductivity on health outside the healthcare system is higher than inside it,efficiency needs cross-sectoral policies. And fairness needs them even more,because in order to reduce social inequalities in health, a wide social and politicalresponse is needed.Unless we reduce the well-documented inefficiencies in our current health caresystems the welfare states will fail to consolidate and the overall economic wellbeingcould be in serious trouble. In this article we sketched some policy solutionssuch as pricing according to net benefits of innovation and public encouragementof radical innovation besides the small type incremental and market-ledinnovation. We proposed an independent agency, the National Institute forWelfare Enhancement to guarantee long term fair and efficient social policies inwhich health plays a central role.

Social security in theory and practice (II): Efficiency theories, narrative theories and implications for reform

166 countries have some kind of public old age pension. What economic forcescreate and sustain old age Social Security as a public program? Mulligan and Sala-i-Martin (1999b) document several of the internationally and historically common features of social security programs, and explore "political" theories of Social Security. This paper discusses the "efficiency theories", which view creation of the SS program as a full of partial solution to some market failure. Efficiency explanations of social security include the "SS as welfare for the elderly" the "retirement increases productivity to optimally manage human capital externalities", "optimal retirement insurance", the "prodigal father problem", the "misguided Keynesian", the "optimal longevity insurance", the "governmenteconomizing transaction costs", and the "return on human capital investment". We also analyze four "narrative" theories of social security: the "chain letter theory", the "lump of labor theory", the "monopoly capitalism theory", and the "Sub-but-Nearly-Optimal policy response to private pensions theory".The political and efficiency explanations are compared with the international and historical facts and used to derive implications for replacing the typical pay-as-you-go system with a forced savings plan. Most of the explanations suggest that forced savings does not increase welfare, and may decrease it.

B-1 Monthly Report of Medical Services Provided under Title XIX of the Social Security Act, April 2008

B-1 Medicaid Reports The monthly Medicaid series of eight reports provide summaries of Medicaid eligibles, recipients served, and total payments by county, category of service, and aid category. These reports may also be known as the B-1 Reports. These reports are each available as a PDF for printing or as a CSV file for data analysis. Report name Report number Medically Needy by County - No Spenddown and With Spenddown IAMM1800-R001 Total Medically Needy, All Other Medicaid, and Grand Total by County IAMM1800-R002 Monthly Expenditures by Category of Service IAMM2200-R002 Fiscal YTD Expenditures by Category of Service IAMM2200-R003 ICF & ICF-MR Vendor Payments by County IAMM3800-R001 Monthly Expenditures by Eligibility Program IAMM4400-R001 Monthly Expenditures by Category of Service by Program IAMM4400-R002 Elderly Waiver Summary by County IAMM4600-R002

B-1 Monthly Report of Medical Services Provided under Title XIX of the Social Security Act, March 2008

B-1 Medicaid Reports The monthly Medicaid series of eight reports provide summaries of Medicaid eligibles, recipients served, and total payments by county, category of service, and aid category. These reports may also be known as the B-1 Reports. These reports are each available as a PDF for printing or as a CSV file for data analysis. Report Report name IAMM1800-R001 Medically Needy by County - No Spenddown and With Spenddown IAMM1800-R002 Total Medically Needy, All Other Medicaid, and Grand Total by County IAMM2200-R002 Monthly Expenditures by Category of Service IAMM2200-R003 Fiscal YTD Expenditures by Category of Service IAMM3800-R001 ICF & ICF-MR Vendor Payments by County IAMM4400-R001 Monthly Expenditures by Eligibility Program IAMM4400-R002 Monthly Expenditures by Category of Service by Program IAMM4600-R002 Elderly Waiver Summary by County

B-1 Monthly Report of Medical Services Provided under Title XIX of the Social Security Act, February 2008

B-1 Medicaid Reports The monthly Medicaid series of eight reports provide summaries of Medicaid eligibles, recipients served, and total payments by county, category of service, and aid category. These reports may also be known as the B-1 Reports. These reports are each available as a PDF for printing or as a CSV file for data analysis. Report name Report number IAMM1800-R001 Medically Needy by County - No Spenddown and With Spenddown IAMM1800-R002 Total Medically Needy, All Other Medicaid, and Grand Total by County IAMM2200-R002 Monthly Expenditures by Category of Service IAMM2200-R003 Fiscal YTD Expenditures by Category of Service IAMM3800-R001 ICF & ICF-MR Vendor Payments by County IAMM4400-R001 Monthly Expenditures by Eligibility Program IAMM4400-R002 Monthly Expenditures by Category of Service by Program IAMM4600-R002 Elderly Waiver Summary by County

B-1 Monthly Report of Medical Services Provided under Title XIX of the Social Security Act, January 2008

B-1 Medicaid Reports -- The monthly Medicaid series of eight reports provide summaries of Medicaid eligibles, recipients served, and total payments by county, category of service, and aid category. These reports may also be known as the B-1 Reports. These reports are each available as a PDF for printing or as a CSV file for data analysis. Report Report name IAMM1800-R001--Medically Needy by County - No Spenddown and With Spenddown; IAMM1800-R002--Total Medically Needy, All Other Medicaid, and Grand Total by County; IAMM2200-R002--Monthly Expenditures by Category of Service; IAMM2200-R003--Fiscal YTD Expenditures by Category of Service; IAMM3800-R001--ICF & ICF-MR Vendor Payments by County; IAMM4400-R001--Monthly Expenditures by Eligibility Program; IAMM4400-R002--Monthly Expenditures by Category of Service by Program; IAMM4600-R002--Elderly Waiver Summary by County.

B-1 Monthly Report of Medical Services Provided under Title XIX of the Social Security Act, December 2007

B-1 Medicaid Reports -- The monthly Medicaid series of eight reports provide summaries of Medicaid eligibles, recipients served, and total payments by county, category of service, and aid category. These reports may also be known as the B-1 Reports. These reports are each available as a PDF for printing or as a CSV file for data analysis. Report Report name IAMM1800-R001--Medically Needy by County - No Spenddown and With Spenddown; IAMM1800-R002--Total Medically Needy, All Other Medicaid, and Grand Total by County; IAMM2200-R002--Monthly Expenditures by Category of Service; IAMM2200-R003--Fiscal YTD Expenditures by Category of Service; IAMM3800-R001--ICF & ICF-MR Vendor Payments by County; IAMM4400-R001--Monthly Expenditures by Eligibility Program; IAMM4400-R002--Monthly Expenditures by Category of Service by Program; IAMM4600-R002--Elderly Waiver Summary by County.

B-1 Monthly Report of Medical Services Provided under Title XIX of the Social Security Act, November 2007

B-1 Medicaid Reports -- The monthly Medicaid series of eight reports provide summaries of Medicaid eligibles, recipients served, and total payments by county, category of service, and aid category. These reports may also be known as the B-1 Reports. These reports are each available as a PDF for printing or as a CSV file for data analysis. Report Report name IAMM1800-R001--Medically Needy by County - No Spenddown and With Spenddown; IAMM1800-R002--Total Medically Needy, All Other Medicaid, and Grand Total by County; IAMM2200-R002--Monthly Expenditures by Category of Service; IAMM2200-R003--Fiscal YTD Expenditures by Category of Service; IAMM3800-R001--ICF & ICF-MR Vendor Payments by County; IAMM4400-R001--Monthly Expenditures by Eligibility Program; IAMM4400-R002--Monthly Expenditures by Category of Service by Program; IAMM4600-R002--Elderly Waiver Summary by County.

B-1 Monthly Report of Medical Services Provided under Title XIX of the Social Security Act, October 2007

B-1 Medicaid Reports -- The monthly Medicaid series of eight reports provide summaries of Medicaid eligibles, recipients served, and total payments by county, category of service, and aid category. These reports may also be known as the B-1 Reports. These reports are each available as a PDF for printing or as a CSV file for data analysis. Report Report name IAMM1800-R001--Medically Needy by County - No Spenddown and With Spenddown; IAMM1800-R002--Total Medically Needy, All Other Medicaid, and Grand Total by County; IAMM2200-R002--Monthly Expenditures by Category of Service; IAMM2200-R003--Fiscal YTD Expenditures by Category of Service; IAMM3800-R001--ICF & ICF-MR Vendor Payments by County; IAMM4400-R001--Monthly Expenditures by Eligibility Program; IAMM4400-R002--Monthly Expenditures by Category of Service by Program; IAMM4600-R002--Elderly Waiver Summary by County.

B-1 Monthly Report of Medical Services Provided under Title XIX of the Social Security Act, September 2007

B-1 Medicaid Reports -- The monthly Medicaid series of eight reports provide summaries of Medicaid eligibles, recipients served, and total payments by county, category of service, and aid category. These reports may also be known as the B-1 Reports. These reports are each available as a PDF for printing or as a CSV file for data analysis. Report Report name IAMM1800-R001--Medically Needy by County - No Spenddown and With Spenddown; IAMM1800-R002--Total Medically Needy, All Other Medicaid, and Grand Total by County; IAMM2200-R002--Monthly Expenditures by Category of Service; IAMM2200-R003--Fiscal YTD Expenditures by Category of Service; IAMM3800-R001--ICF & ICF-MR Vendor Payments by County; IAMM4400-R001--Monthly Expenditures by Eligibility Program; IAMM4400-R002--Monthly Expenditures by Category of Service by Program; IAMM4600-R002--Elderly Waiver Summary by County.