Voting on Social Security: The Family as Decision‐Making Unit

Abstract

SUMMARY In periods of demographic change, pay‐as‐you‐go financed social security systems imply transfers of lifetime income not only among generational cohorts, but also between families of different size and generational composition. Whereas previous models of voting on social security in democratic societies focused on the first type of transfer and assumed homogeneity of interests within each generation, we treat the family as the relevant decision‐making unit. It is then analyzed how the results of majority voting on public pension and sickness funds depend on the rate of time preference, the overall rate of population growth and the distribution of children across families. Not surprisingly, opposition to mandatory social security turns out to be greatest when children are most unevenly distributed.