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Antipoverty Effectiveness of Social Insurance Programs. Today’s Reading Schiller Ch. 13-Social Insurance Programs DeParle, Ch. 18: A Shot at the American Dream: Milwaukee, Fall 1999. Today’s Questions. How do social insurance programs differ from means-tested programs?

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Antipoverty effectiveness of social insurance programs

Antipoverty Effectiveness of Social Insurance Programs

Today’s Reading

Schiller Ch. 13-Social Insurance Programs

DeParle, Ch. 18: A Shot at the American Dream: Milwaukee, Fall 1999


Today s questions
Today’s Questions

  • How do social insurance programs differ from means-tested programs?

  • What are the most important social insurance programs by number of beneficiaries and total benefits?

  • What is a social contract and how does this concept relate to Social Security?

  • How important are social insurance programs in the fight against poverty?


How do social insurance programs differ from means tested programs
How do social insurance programs differ from means-tested programs?

  • Entitlement

  • Eligibility conditioned on work in covered employment, not on income and assets

  • Benefits are not determined by need

  • Absence of work incentive rules (offset rates and disregards) by and large


What are the most important social insurance programs by number of beneficiaries and total benefits
What are the most important social insurance programs by number of beneficiaries and total benefits?

  • See the Annual Statistical Supplement, 2005

    • http://www.ssa.gov/policy/docs/statcomps/supplement/2005/index.html


Social insurance programs 2004
Social Insurance Programs, 2004 number of beneficiaries and total benefits?


Major means tested programs
Major Means-tested Programs number of beneficiaries and total benefits?


What is a social contract and how does this concept relate to social security
What is a social contract and how does this concept relate to Social Security?

  • Do you think you will receive a Social Security benefit that resembles today’s benefit when you retire? Why or why not?


How important are social insurance programs in the fight against poverty
How important are social insurance programs in the fight against poverty?

  • OASI

    • “Social Security is still a highly effective antipoverty mechanism. Its antipoverty effectiveness results from the massive amount of income that is transferred and from the fact that virtually all older people receive Social Security benefits.” (Schiller, p. 241)


Antipoverty effectiveness cont
Antipoverty Effectiveness, cont. against poverty?

  • Medicare

    • “Because Medicare is an in-kind benefit, it does not directly affect the official poverty count. Medicare reduces the expenses of the aged and allows them to stay above the poverty living standards even if their cash income falls short of official poverty thresholds.” (Schiller p. 245)


Antipoverty effectiveness cont1
Antipoverty Effectiveness, cont. against poverty?

  • Unemployment Insurance

    • “Most UI benefits are not paid to poor people or even to people who are at high risk of becoming poor.” (Schiller, p. 247)


Antipoverty effectiveness of social security
Antipoverty Effectiveness of Social Security against poverty?

  • To what extent does Social Security decrease poverty among

    • the elderly?

    • children?


Antipoverty effectiveness of social insurance programs

Source: “Social Security and Elderly Poverty, against poverty?http://www.nber.org/aginghealth/summer04/w10466.html


Antipoverty effectiveness of social security cont
Antipoverty Effectiveness of Social Security, cont. against poverty?

  • Nearly half of all elderly persons had income below the poverty line before receipt of Social Security benefits. After receiving Social Security, only 1 in 9 remained poor.

  • Source: House Ways and Means Committee 2004 Green Book, http://www.gpoaccess.gov/wmprints/green/2004.html


Antipoverty effectiveness of social insurance 65 yr
Antipoverty Effectiveness against poverty?of Social Insurance, 65 yr. +

Source: 2004 Green Book


Antipoverty effectiveness of social security cont1
Antipoverty Effectiveness of Social Security, cont. against poverty?

  • Is the antipoverty effectiveness of Social Security overstated?

    • Order sensitive problem

    • Behavioral effects


Antipoverty effectiveness of social security cont2
Antipoverty Effectiveness of Social Security, cont. against poverty?

  • What factors other than Social Security might explain the decline in poverty among the elderly?

    • Demographic trends

    • Labor force participation

    • Saving

    • Living arrangements


Antipoverty effectiveness of social insurance programs

Source: H. Boushey, “Social Security: The Most Important Anti-Poverty Program for Children, Center for Economic and Policy Research, March 28, 2005. http://www.cepr.net/publications/social_security_2005_03_29.pdf


Antipoverty effectiveness of social insurance 18 yr
Antipoverty Effectiveness Anti-Poverty Program for Children, Center for Economic and Policy Research, March 28, 2005. of Social Insurance, < 18 yr.

Source: 2004 Green Book