Does Age(ing) Really Matter? Modeling and Testing the Impact of Age on Public Pensions Preferences

Many theories and public discussions about pension systems and their reforms are based on the assumption that individual age is a major factor in determining individual preferences for or against public pension schemes. The aim of this paper is to explore whether different age groups do indeed differ in their pension preferences. In a first step, I develop a simple three-period OLG model to endogenously derive preferences for young workers, old workers and retirees. Some numerical simulations are conducted to illustrate the underlying theoretical mechanisms. The model yields two results: (1) Preferences for a bigger public pension system increase with age. (2) Preferences of old workers in particular depend on population growth, and on the size of the existing pension scheme. The paper proceeds to test these hypotheses using cross-national survey data for 21 countries provided by the ISSP