SOCIAL-SECURITY AND SAVING - NEW TIME-SERIES EVIDENCE

This paper reexamines the results of my 1974 paper on Social Security and saving with the help of an additional 21 years of data. The estima tes presented here reconfirm that each dollar of Social Security wealt h (SSW) reduces private saving by between two and three cents. The par ameter estimates for the postwar period and for the entire sample sinc e 1930 are very similar. The correction of the error in the original S SW series between 1958-1971 therefore does not significantly affect th e original results. The estimated effect of SSW is robust with respect to the addition of a variety of variables that have been suggested in previous critiques of the original study. In the aggregate, the param eter values imply that the Social Security program currently reduces o verall private saving by nearly 60 percent.