On Myopia as Rationale for Social Security

This paper revisits the role played by myopia in generating a theoreticalrationale for pay-as-you-go social security in dynamically efficient economies.Contrary to received wisdom, if the real interest rate is exogenously fixed, enough myopiamay justify public pensions but never alongside positive private savings. Withsufficient myopia, co-existence of positive optimal pensions and positive private savingis possible if the real interest rate on saving evolves endogenously, as in a model witha neoclassical technology.[...]