Social security, life insurance and annuities for families

In this paper we ask whether some aspects of social security, namely its role as providing insurance against uncertain life spans is welfare enhancing. We pose and calibrate models with agents differing in age, sex and marital histories where we compare the implications of different social security policies under a variety of market structures. We find no support for social security policies for the standard reasons. We do find some support for maintaining the Survivor Benefits program within social security. Everything else equal, phasing out Survivors ’ Benefits into standard social security reduces the wellbeing of people by.03% of consumption on a flow basis. We also explore these issues in a world with people live longer and we find no differences in our answers