Awards

• Winner of Written by Peter Diamond, winner of the 2010 Nobel Prize for Economics.

Overview

Mandatory pensions are a worldwide phenomenon. However, with fixed contribution rates, monthly benefits, and retirement ages, pension systems are not consistent with three long-run trends: declining mortality, declining fertility, and earlier retirement. Many systems need reform. This book gives an extensive nontechnical explanation of the economics of pension design. The theoretical arguments have three elements:* Pension systems have multiple objectives--consumption smoothing, insurance, poverty relief, and redistribution. Good policy needs to bear them all in mind.* Good analysis should be framed in a second-best context-- simple economic models are a bad guide to policy design in a world with imperfect information and decision-making, incomplete markets and taxation.* Any choice of pension system has risk-sharing and distributional consequences, which the book recognizes explicitly.Barr and Diamond's analysis includes labor markets, capital markets, risk sharing, and gender and family, with comparison of PAYG and funded systems, recognizing that the suitable level of funding differs by country.Alongside the economic principles of good design, policy must also take account of a country's capacity to implement the system. Thus the theoretical analysis is complemented by discussion of implementation, and of experiences, both good and bad, in many countries, with particular attention to Chile and China.

Full Product Details

9780195387728

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Reviews

<br> This volume distills the accumulated experience of two of the world's leading experts on pension policy. It reports on how a broad cross-section of nations around the globe have grappled with the varied and conflicting objectives of national pension programs. It is a splendid example of something all too rare--the marriage of the best of economic theory and politically and institutionally sensitive observational experience. --Henry J. Aaron, Bruce and Virginia MacLaury Senior Fellow, The Brookings Institution<p><br> I love this book. It is a concise and brilliant analysis of pension reform around the world. I recommend it as a primer for anyone interested in understanding the key issues and policy alternatives. --Zvi Bodie, Norman and Adele Barron Professor of Management, Boston University<p><br>Praise for Reforming Pensions: Principles and Policy Choices <br> Two of the finest minds in the economics profession lucidly explain the theory and practice of pensions. They uncover the various trade-offs in designing and reforming pension systems in an imperfect world. While difficult, good reforms appear to be possible. I wish that this book had been available when I became interested in pensions. It would have saved me a lot of time and energy. ---Lans Bovenberg, Scientific Director, Netspar, Tilburg University<p><br>Praise for Reforming Pensions: Principles and Policy Choices <br> This is a wonderful book. Two very smart economists, steeped in theory and exposure to real-life pension issues, lay out the principles for good pension reform. They emphasize that pensions have multiple purposes-consumption smoothing, poverty relief, insurance, and redistribution, that we live in a 'second-best' world, and that, because countries vary significantly in their stage of development, fiscal capacities, and administrative capabilities, there is no single best pension design. Yet using a host of international examples, the authors demonstrate how sound economic principle

<br> This volume distills the accumulated experience of two of the world's leading experts on pension policy. It reports on how a broad cross-section of nations around the globe have grappled with the varied and conflicting objectives of national pension programs. It is a splendid example of something all too rare--the marriage of the best of economic theory and politically and institutionally sensitive observational experience. --Henry J. Aaron, Bruce and Virginia MacLaury Senior Fellow, The Brookings Institution<br> I love this book. It is a concise and brilliant analysis of pension reform around the world. I recommend it as a primer for anyone interested in understanding the key issues and policy alternatives. --Zvi Bodie, Norman and Adele Barron Professor of Management, Boston University<br>Praise for Reforming Pensions: Principles and Policy Choices <br> Two of the finest minds in the economics profession lucidly explain the theory and practice of pensions. They uncover the variou

<br> This volume distills the accumulated experience of two of the world's leading experts on pension policy. It reports on how a broad cross-section of nations around the globe have grappled with the varied and conflicting objectives of national pension programs. It is a splendid example of something all too rare--the marriage of the best of economic theory and politically and institutionally sensitive observational experience. --Henry J. Aaron, Bruce and Virginia MacLaury Senior Fellow, The Brookings Institution<p><br> I love this book. It is a concise and brilliant analysis of pension reform around the world. I recommend it as a primer for anyone interested in understanding the key issues and policy alternatives. --Zvi Bodie, Norman and Adele Barron Professor of Management, Boston University<p><br>Praise for Reforming Pensions: Principles and Policy Choices <br> Two of the finest minds in the economics profession lucidly explain the theory and practice of pensions. They uncover t

Author Information

Nicholas Barr is Professor of Public Economics at the London School of Economics, the author of numerous books and articles, and a Trustee of HelpAge International. He spent two periods at the World Bank working on income transfers in Central and Eastern Europe and has been a Visiting Scholar at the Fiscal Affairs Department at the IMF. He has been active in debates about pension reform and higher education finance, advising governments in the post-communist countries, and in the UK, Australia, Chile, China, Hungary, New Zealand and South Africa. Peter Diamond is an Institute Professor and professor of economics at MIT where he has taught since 1966. He has been President of the American Economic Association, of the Econometric Society, and of the National Academy of Social Insurance. He first consulted to U.S. Congress about Social Security reform in 1974. He has consulted about social security to the World Bank and has written about social security in Chile, China, France, Germany, Italy, the Netherlands, Spain, Sweden and the UK as well as the US.

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