T. LYNN FISHER, Affiliation Unknown
Email: Lynn.Fisher@ssa.gov

Other publications using the same data source as Income of the Population 55 or Older, 2004 have produced different statistics for income and the relative importance of Social Security that appear contradictory. Depending on the unit of observation and whose income is considered, the estimates of the percentage of the elderly receiving all of their income from Social Security in 2004 varies from 13 percent to 22 percent. This article explains how the choice of the unit of observation impacts measures of the relative importance of Social Security benefits for the elderly.

HELMUTH CREMER, University of Toulouse I - GREMAQ-IDEI, Centre for Economic Policy Research (CEPR), CESifo (Center for Economic Studies and Ifo Institute for Economic Research)
Email: helmut@cict.fr
JEAN-MARIE LOZACHMEUR, Affiliation Unknown
PIERRE PESTIEAU, University of Liege - Research Center on Public and Population Economics, Centre for Economic Policy Research (CEPR), CESifo (Center for Economic Studies and Ifo Institute for Economic Research)
Email: p.pestieau@ulg.ac.be

Social insurance for the elderly is judged responsible for the widely observed trend towards early retirement. In a world of laissez-faire or in a first-best setting, there would be no such trend. However, when first-best instruments are not available, because health and productivity are not observable, the optimal social insurance policy may imply a distortion on the retirement decision. The main point we make is that while there is no doubt that retirement systems induce an excessive bias towards early retirement in many countries, a complete elimination of this bias (i.e. a switch to an actuarially fair system) is not the right answer for two reasons. First, some distortions are second-best optimal. This is the normative argument. Second, and on the positive side, the elimination of the bias might be problematic from a political perspective. Depending on the political process, either it may not be feasible or alternatively it may tend to undermine the political support for the pension system itself.

TODD E. ELDER, Michigan State University
Email: telder@msu.edu
ELIZABETH T. POWERS, University of Illinois at Urbana-Champaign
Email: epowers@uiuc.edu

This paper is the first to analyze eligibility and participation spells and estimate dynamic models of SSI participation by the aged. We first describe eligibility and participation spells and estimate competing-risk models of the determinants of transitions. Next, we present evidence of extensive measurement error in the expected SSI benefit and the associated imputed eligibility status of sample members. We compare and contrast two approaches to ameliorating this error. A cross-section approach exploits self-reports of participants' benefits, and a longitudinal approach makes inferences from time variation in the computed benefit. We find that the hazard model estimates vary little with regard to whether or which particular measurement error correction is employed. Finally, the longitudinal patterns of eligibility and participation suggest that take-up rates among the persistently eligible are nearly 80 percent.

MALCOLM VOYCE, Macquarie University - Division of Law
Email: Malcolm.Voyce@law.mq.edu.au

This article illustrates the problems of senior pension holders who may be involved in marriage-like relationships under the Social Security Act 1991. The article shows how an expanded definition of these relationships in 1995 has caught a wider group of couples who may suffer a reduction of pension.

At the same time the article traces the concept of cohabitation through a change in the meaning of the concept of 'dependency'. This approach shows how this key indicator of cohabitation has shifted or expanded with the recognition of new forms of relationships.

T. LYNN FISHER, Affiliation Unknown
Email: Lynn.Fisher@ssa.gov

Through the 1990s and the early 2000s, the Income of the Population 55 or Older has reported a decline in the proportion of the elderly receiving asset income and the corresponding rise in the proportion receiving all of their income from Social Security. This analysis uses the Survey of Consumer Finances from 1992 to 2001 to examine financial asset holdings of the elderly and to determine if those who do not report asset income in fact might hold assets that are likely to generate income. Imputing asset income from likely income-producing holdings, the article examines the impact of probable missing asset income information upon measures of elderly income.

T. LYNN FISHER, Affiliation Unknown
Email: Lynn.Fisher@ssa.gov

Provided is a discussion of the cumulative effects of the measurement alternatives described in the three previous articles: considering family income of persons rather than aged units, using administrative data in place of survey reported data, and switching the data source from the Current Population Survey (CPS) to the Survey of Income and Program Participation (SIPP). The current-methodology CPS statistic of 17.9 percent of beneficiary aged units receiving all of their income from Social Security in 1996 falls to a substantially smaller estimated 4.5 percent of elderly beneficiary persons based on family income when using the SIPP and Social Security administrative data.