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Gaming Social Security
Few, if any, articles on Social Security discuss “Adverse Selection”, and the associated havoc that it can play on projections for the system’s future. Another name for “Adverse Selection” is gaming the system. Whatever you call it, the concept is basically the economic equivalent of gravity. The concept refers to the economic force in which freedom and choice combine to create the least profitable response to a business’s offerings. In terms of Social Security, the least profitable mix of customer means that some taxpayers are trying to contribute the least while at the same time some beneficiaries are trying to maximize what they collect. While we may like the system as a whole, our individual interests are doing everything that they can to drive the system to insolvency. Read more…
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