A Note on Resource Testing and Temptation
Cagri Kumru, John Piggott and Athanasios C. Thanopoulos
This study analyzes the relative performance in terms of welfare of the current U.S. PAYG system compared to an array of cost equivalent alternative specifications of means-tested pension programs. We conduct our analysis under two different settings. While in the first setting, individuals have standard preferences, in the second setting individuals have self-control preferences. We show that the implications of the reform substantially differs across the two settings.