Funding Theories of Social Insurance

Within the social sciences the influence of Paul Samuelson, the MIT economist, is almost omnipresent. The majority of fledgling students of economics learn the rudiments of the subject from a textbook he has written. Technical papers he has penned have appeared in most of the major journals devoted to economics, political science, or statistics. Readers of the popular magazine Newsweek have grown accustomed to his periodic essays on current political and economic topics. One of these essays, “Social Security,“] was devoted to making the point that because of the growth of population and of real per capita income, the participants in a social insurance system which involves transfer payments from active to retired workers will receive more in benefits than they will contribute in social insurance taxes which are set on a pay-as-you-go level. In an earlier technical paper Samuelson had discussed the same idea.