Socail Security: how much of it is redistributive?

[NobleSavage]

Asking honestly and looking for reasoned answers. Please don't muck up this thread with capitalism vs socialism or what ought to be instead of what is. Yes, I know that the employer pays half and yes I know it caps out.

 

[untermensche]

Do you classify insurance plans as redistributive?

I've paid a lot for car insurance over the years and have gotten very little in return.

Is that a redistribution?

 

[KeepTalking]

Do you classify insurance plans as redistributive?

I've paid a lot for car insurance over the years and have gotten very little in return.

Is that a redistribution?

Yes. It is taking your money, and redistributing it to the insurance companies.

 

[coloradoatheist]

Asking honestly and looking for reasoned answers. Please don't muck up this thread with capitalism vs socialism or what ought to be instead of what is. Yes, I know that the employer pays half and yes I know it caps out.

It's all redistributive because it's taking from one group and giving it to another. But it's mixed in terms of sometimes giving it to the rich from the poor and vice versa.

 

[NobleSavage]

.... But it's mixed in terms of sometimes giving it to the rich from the poor and vice versa.

Yes, I'm looking for the numbers on the mix.

 

[dismal]

Do you classify insurance plans as redistributive?

I've paid a lot for car insurance over the years and have gotten very little in return.

Is that a redistribution?

Any reasonable analysis would focus on expected returns to a given income demographic to cancel out insurance-like effects.

 

[dismal]

.... But it's mixed in terms of sometimes giving it to the rich from the poor and vice versa.

Yes, I'm looking for the numbers on the mix.

There are a bunch of papers out there. Here's one.

http://www.nber.org/chapters/c9747.pdf

 

[Alcoholic Actuary]

Asking honestly and looking for reasoned answers. Please don't muck up this thread with capitalism vs socialism or what ought to be instead of what is. Yes, I know that the employer pays half and yes I know it caps out.

It's all redistributed.

It is insurance so there is no need to remove 'insurance-like' effects.

It could end tomorrow and everything you've paid in would be gone. The only benefit you would get is that you get to stop paying in to it.

aa

 

[laughing dog]

When you ask how redistributive SS is, are you asking how much redistribution occurs among the participants (i.e. how benefits are related to contributions) or some other notion of redistribution?

 

[NobleSavage]

.... are you asking how much redistribution occurs among the participants (i.e. how benefits are related to contributions)...

Yes. And If you never worked a day in your life or payed into SS will you still get some benefits? Do they adjust your benefits based on how much you have in the bank when you retire?

 

[Ford]

Honestly?


It is as minimally redistributive a safety net program as we have.



Social Security is not a program where by wealth is taken from the top earners and handed over to the bottom. You pay in over a lifetime of work, and reap the (rather modest) benefit when you can no longer work.

 

[Axulus]

Asking honestly and looking for reasoned answers. Please don't muck up this thread with capitalism vs socialism or what ought to be instead of what is. Yes, I know that the employer pays half and yes I know it caps out.

It's all redistributed.

It is insurance so there is no need to remove 'insurance-like' effects.

It could end tomorrow and everything you've paid in would be gone. The only benefit you would get is that you get to stop paying in to it.

aa

You can separate out the "insurance like effects" by determining how much would have to be paid in to receive an equivalent annuity/insurance component from a private entity. If you must pay more than what you would to a private entity, that excess can be considered redistributive to others. If you pay less, the excess is redistributive to you.

 

[jonatha]

And If you never worked a day in your life or payed into SS will you still get some benefits?

Possibly, if your spouse or parent paid in.

It is also possible for certain government workers (e.g., teachers) not to get anything even if they have paid in.

Do they adjust your benefits based on how much you have in the bank when you retire?

Not that I know of.

 

[jonatha]

There are a bunch of papers out there. Here's one.

http://www.nber.org/chapters/c9747.pdf

TLDR version - between 5 and 9 percent of Social Security payments represent transfers from higher income households to lower income households.

 

[Duke Leto]

I would emphasize that we are discussing the Socail Security program, not the Social Security Program.

 

[laughing dog]

.... are you asking how much redistribution occurs among the participants (i.e. how benefits are related to contributions)...

Yes. And If you never worked a day in your life or payed into SS will you still get some benefits?

In certain situations, yes. For example, the non-earner in a marriage can claim SS benefits.

Do they adjust your benefits based on how much you have in the bank when you retire?

For the retirement SS benefits, the answer is no.

 

[Alcoholic Actuary]

It's all redistributed.

It is insurance so there is no need to remove 'insurance-like' effects.

It could end tomorrow and everything you've paid in would be gone. The only benefit you would get is that you get to stop paying in to it.

aa

You can separate out the "insurance like effects" by determining how much would have to be paid in to receive an equivalent annuity/insurance component from a private entity. If you must pay more than what you would to a private entity, that excess can be considered redistributive to others. If you pay less, the excess is redistributive to you.

Even with an annuity the contributions of those who die early are redistributed to those who die later. So it's still insurance and has 'insurance-like' effects.

With SS, there is no pre-funding. It is not meant to be, nor behave like an annuity. The contributions of workers are immediately redistributed to retirees.

eta: The only payment streams without 'insurance-like' effects are bonds with coupons or perpetuities.

aa

 

[Axulus]

You can separate out the "insurance like effects" by determining how much would have to be paid in to receive an equivalent annuity/insurance component from a private entity. If you must pay more than what you would to a private entity, that excess can be considered redistributive to others. If you pay less, the excess is redistributive to you.

Even with an annuity the contributions of those who die early are redistributed to those who die later. So it's still insurance and has 'insurance-like' effects.

With SS, there is no pre-funding. It is not meant to be, nor behave like an annuity. The contributions of workers are immediately redistributed to retirees.

eta: The only payment streams without 'insurance-like' effects are bonds with coupons or perpetuities.

aa

I'm talking more about the stream of cash flows and under what scenarios. How much would one have to contribute to receive an equivalent stream of cash flows under the same scenarios from a private entity with a similar amount of risk? While we can't come up with an exact number, I'm assuming some reasonable calculation can be done if one desired.

If one would have to pay less to a private entity, we can think of the excess amount that social security collects as a redistribution component.

 

[laughing dog]

Even with an annuity the contributions of those who die early are redistributed to those who die later. So it's still insurance and has 'insurance-like' effects.

With SS, there is no pre-funding. It is not meant to be, nor behave like an annuity. The contributions of workers are immediately redistributed to retirees.

eta: The only payment streams without 'insurance-like' effects are bonds with coupons or perpetuities.

aa

I'm talking more about the stream of cash flows and under what scenarios. How much would one have to contribute to receive an equivalent stream of cash flows under the same scenarios from a private entity with a similar amount of risk? While we can't come up with an exact number, I'm assuming some reasonable calculation can be done if one desired.

If one would have to pay less to a private entity, we can think of the excess amount that social security collects as a redistribution component.

And if one would have to pay more?

 

[Axulus]

I'm talking more about the stream of cash flows and under what scenarios. How much would one have to contribute to receive an equivalent stream of cash flows under the same scenarios from a private entity with a similar amount of risk? While we can't come up with an exact number, I'm assuming some reasonable calculation can be done if one desired.

If one would have to pay less to a private entity, we can think of the excess amount that social security collects as a redistribution component.

And if one would have to pay more?

If one would have to otherwise pay more, than the difference would be akin to a redistributive payment to that person.