I. Social Security and Saving: The Theoretical Indeterminacy

T HE social security program will pay benefits of more than $100 billion in 1978.1 Public transfers on this scale are large enough to have profound effects on the behavior of the U.S. economy. The most important effect, although not the only one, is likely to be the impact of social security on private saving and aggregate capital accumulation. The present paper contrib-utes to the analysis of this issue by providing new evidence on the extent to which the accumula-tion of wealth by individual households responds to differences in social security benefits