Elderly Entitlements and Wealth Inequality
Abstract
By most measures, wealth inequality has risen significantly over the last three decades and is a growing concern. However, standard wealth definitions require that individuals possess a legal claim to assets included as wealth. Accrued Social Security benefits are often excluded from measures of wealth on the grounds that workers and retirees lack a legal claim to the receipt of those benefits. However, accrued benefits are large and their existence affects the lifecycle savings behavior of current recipients and current workers. In PERC working paper 2205, the authors identify Social Security wealth as accrued benefits based on past participation in the program. Accrued Social Security benefits are found to be much more equally distributed than are the conventional measures of wealth. From 1989 to 2019, the top 10% of families held a relatively stable share of about 17.8% of accrued Social Security benefits. In contrast, these families saw their share of conventionally measured net worth grow from 63.1% to 70.8% or by 7.7 percentage points. When Social Security is included, the share of total wealth held by the top 10% was 54.0% in 1989 and 57.3% in 2019. Using this more comprehensive wealth measure that includes Social Security benefits results in a lower measure of wealth inequality and a lower growth over time in that measure of inequality.
Description
PoliticalEconomyCollections
Citation
Jansen, Dennis W.; Rettenmaier, Andrew J. (2022). Elderly Entitlements and Wealth Inequality. Private Enterprise Research Center, Texas A&M University; Texas A&M University. Library. Available electronically from https : / /hdl .handle .net /1969 .1 /199376.