Title:	Political Preferences and the Aging of Populations
Authors:	Oliver Pamp
Keywords:	Preferences
Issue Date:	2015
Publisher:	Springer
Description:	Population aging and its profound consequences puts the sustainability of pension systems in industrialized Western democracies at risk. Almost all pensions systems in these countries are primarily based on a pay-as-yougo (PAYG) principle. Hence, changes in pension benefits or contribution rates are immediately felt by the participants of the system. Any change in a pension system will thus involve winners and losers. Pension reforms are obviously a very interesting and difficult to analyze policy field because they involve policy changes that don’t constitute mere Pareto improvements nor do they easily allow the implementation of simple compensation schemes for the distributional losers of a reform. To model the impact of population aging on pension systems and their reform thus requires a profound understanding of voters’ preferences and of the political environment in which such an endeavor is undertaken. This holds for any type of pension reform, regardless of whether the reform is parametric (i.e. changes in the contribution rate, benefit levels or eligibility rules) or non-parametric (partial or full transitions to prefunded systems). Building on the current state of research on pension systems and their reform, this dissertation sets out to, first, review existing political economy models showing that pension policy is mainly a political problem. Second, it will prove that any pension reform is by and large a redistributional policy shift. Third and foremost, this dissertations develops a political economy model of a pension system that explicitly considers the political preferences of different age groups and also takes into account some of the underlying political incentives generated by the size of the pension system and the political environment. Hence, pension policy is examined not in isolation but in view of the fiscal trade-offs made with respect to other public policy goods. The resulting simple overlapping-generations model allows for an easy derivation of the policy preferences of different age groups. This alone, however, would be insufficient when analyzing the prospects of a pension reform, since individual preferences need to be aggregated through an electoral process. The existing political economy literature has mainly analyzed this aggregation process by assuming the existence of a direct democracy with popular referenda or by analyzing rather simple settings of representative democracy, without properly taking into account the impact of different types of electoral institutions. This dissertation sets out to address this very shortcoming. In the research tradition of modern political economy, it attempts to offer a theoretical analysis by focusing on voters’ policy preferences and the way in which these preferences are aggregated through domestic electoral institutions. This focus allows to derive different scenarios for the feasibility and direction of pension reform. Finally, some hypotheses derived from the model are tentatively tested using cross-national survey data of 21 countries provided by the International Social Survey Programme.
URI:	http://10.6.20.12:80/handle/123456789/53723
ISBN:	978-3-658-08615-2
Appears in Collections:	Population Studies

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