Working Paper: NBER ID: w2517
Authors: Andrew B. Abel
Abstract: Various tax policies provide consumers with forms of insurance. Social security has the payoff characteristics of an annuity. The income tax provides consumers with a degree of Income insurance because the government shares part of the individual's income risk. Redistributive taxes can be used to spread aggregate income risks across different generations The effects of these and other tax policies are shown to depend crucially on the nature of existing private insurance arrangements.
Keywords: fiscal policy; insurance; social security; income tax; consumer behavior
JEL Codes: E62; H24; H31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| individual longevity risk (J17) | saving behavior (D14) |
| saving behavior (D14) | wealth distribution (D31) |
| private insurance arrangements (I13) | saving behavior (D14) |
| income tax (H26) | precautionary saving (D14) |
| precautionary saving (D14) | wealth distribution (D31) |
| fully funded social security (H55) | increase in consumption (E21) |