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- Title
Design Choices in Privatized Social-Security Systems: Learning from the Swedish Experience.
- Authors
Cronqvist, Henrik; Thaler, Richard H.
- Abstract
This article focuses on the design choices adopted by the Swedish government for the privatization plan of their social security systems. In the 2000 U.S. Presidential campaign, George W. Bush advocated a partial privatization of the Social Security system. According to his plan, a portion of the payroll tax would be designated for individual savings accounts. At the same time as this issue was being debated in the U.S., Sweden was in the process of launching a system that is very similar to President Bush's proposal. Although Bush's plan did not get much attention in the early years of his administration, the proposal may resurface either in the U.S. or in other countries. If so, important lessons can be learned from the Swedish experience. In particular, the Swedish plan adopted an interesting mix of design choices that can now be evaluated based on three years of post-implementation experience. Although there is a large literature in economics on the design of social security systems, most of that literature is concerned with macroeconomic considerations such as funding. In contrast, there has been much less attention devoted to the details of how plans might be designed, in part because these details do not seem important from a standard economic perspective.
- Subjects
SWEDEN; UNITED States; SOCIAL security; ECONOMIC policy
- Publication
American Economic Review, 2004, Vol 94, Issue 2, p424
- ISSN
0002-8282
- Publication type
Article
- DOI
10.1257/0002828041301632