Inexcusable Failure of Vanity

by Will Wilkinson on March 30, 2005

In an utterly bizarre breakdown of narcissism, I failed to promote myself on my own blog.

Anyway, the oversight is that I failed to mention my piece in TCS the other day, “Insuring Against the Inevitable” on the “don’t think about rates of return; social security is insurance canard.

I don’t know how this happened, and it won’t happen again.

Gareth

*SS has disability insurance and death benefit features that are obviously insurance.

*SS, like other defined benefit schemes, allows for spreading the actuarial risk that you will live longer than expected. True, a life annuity could do this as well, but it is still a spreading of risk, and therefore insurance.

*SS spreads investment risk. A diversified portfolio could do this too (but at a cost), but SS can also spread systemic risk between age cohorts.

Finally, if Friedman is right and SS is just a tax and a (logically independent) program, then talk of a SS crisis distinct from the solvency of the US Government is meaningless.

monkyboy

If you hadn't noticed, the feeding tube has been removed from the effort to loot SS, let it go, Will. Poorly researched articles like yours it what caused its demise. The people turned out to be pretty smart!

When Social Security was enacted in 1935, life expectancy hovered around 65, the retirement age. So there was a point in time at which outliving your ability to take care of yourself was unlikely, but possible, and therefore a "risk" to guard against.

Unlikely? The average worker entering the workforce in 1935 had a better than 50% change of reaching the age 65. Those that made it had a life expectancy of 13 years, not that much lower than today's 17 years.

Your "facts" overlook the high infant mortality rate in 1935. If you made it through childhood, your life expectancy wasn't that much lower than it would be today.

Jon H

Getting old is not really inevitable, because you could die first. However, I'll let that pass.

It's not insurance against getting old, it's insurance against ending up old without having done well in life and needing extra financial support to get by.

That's not inevitable. But it's not predictable, either, because shit happens during the course of 65 years.