Salience and Social Security Benefits

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractWe study the effect of salience in the social security benefit system on labor earnings by exploiting kinks and notches in budget lines introduced by earnings testing and social security accrual mechanisms for 67-69 year old workers in Norway. An earnings test had large effects on labor earnings, while an accrual system discontinuity had no discernible effects. We interpret the difference as likely to be caused by a lack of salience in the accrual incentives: agents are not able or willing to take into account the value of future benefit increases when considering the relevant rewards to working..

Life Expectancy and Claiming Behavior in a Flexible Pension System

“…The main determinant of the supplementary pension is an average point score, which is calculated on the basis of the individual's 20 highest annual incomes measured in units of the BA; see, for example, Brinch et al . () for details.…”

“…The supplementary earnings based pension is determined by labor income earned between ages 17 and 69, and full supplementary pensions can be obtained after 40 years of contributions. The main determinant of the supplementary pension is an average point score, which is calculated on the basis of the individual's 20 highest annual incomes measured in units of the BA; see, for example, Brinch et al (2017) for details.…”

“…Hence, the system provides no disincentives to work in terms of implicit taxes on continued work past the pension-eligible age (Gruber and Wise, 1999). This is an important feature in light of the substantial behavioral responses to earnings testing, as documented by recent studies (e.g., Song and Manchester, 2007;Haider and Loughran, 2008;Gelber et al, 2013;Hernaes et al, 2016;Brinch et al, 2017).…”

“…Although the universal coverage provided by the pension system and the absence of endogenous pricing exclude any concern for missing markets, there are reasons to suspect that adverse selection takes place also in the context of public pension claiming behavior. However, recently it has been shown that the usual assumption of fully optimizing individuals might not hold in the context of complex tax and benefit systems (see, e.g., Chetty et al, 2009;Brinch et al, 2017). Another strand of literature studies to what extent financial literacy affects individual behavior (e.g., Lusardi and Mitchell, 2007).…”

Salience of law enforcement: A field experiment

“…Our paper also contributes to the broader literature on salience and decision making. How attentiongrabbing cues -or camouflaged features -affect choices has been studied in several contexts, including product choice (Drèze et al 1994;Chetty et al 2009;Bordalo et al 2013), price setting behavior (Finkelstein 2009;Grubb 2015), personal finance (Stango and Zinman 2014), and social security benefits (Brinch et al 2015). Apart from the literature discussed above, salience has not been studied within the context of illegal behavior.…”