Political process shifts social security costs to unborn, raising future tax rates
The article examines how social security can be sustained over time by analyzing how different generations interact politically and economically. The researchers use a model to show that even without altruism, politicians can create intergenerational transfers to benefit older voters at the expense of future generations. This leads to higher social security costs than what is best for society as a whole. As the population ages, social security systems are predicted to grow, but benefits for retirees may decrease. The model suggests that social security tax rates are likely to be close to current levels, but higher than what would be optimal.