Would Privatizing Social Security Pay a Higher Rate of Return?
As the Dow Jones Index soared over the last decade, many Americans began to believe that stock markets could do no wrong. The market’s success in generating wealth has stood in sharp contrast to the shaky future forecast for the U.S. Social Security system. Increasing numbers of young workers seriously doubt whether they will ever receive Social Security benefits, and now view Social Security as a vestige of FDR economics better suited to a bygone age. Many suggest that converting Social Security to individual accounts, often called privatization, is the solution. The pros and cons of Social Security privatization are analyzed in two new Pension Research Council papers by Olivia S. Mitchell of the Wharton School with John Geanakoplos of Yale University and Stephen P. Zeldes of Columbia University. Arguing against critics of the Social Security system, the researchers show that privatization will not necessarily offer higher rates of return to all people in the system. Privatization cou
