Altruism and fairness in a public pension system



11

where Uk', Yk', Yh', Yi', r* and akg are first differences.

Another problem is that eqs. (1) and (3) deal with the knowledge of the individuals about their income
during old age. Typically, individuals’ retirement income consists of a public pension payment
supplemented with a complementary pension payment from a firm-related pension plan. Based on macro
data it is known that in this system more than 80% of the employees are able to reach a pension income
approximately equal to 70% of last earned income. The data reveal, however, that most respondents
(except the elderly) have no idea about the size of their own complementary pension or the partner’s
one. Table 4.3 illustrates this point.

Table 4.3 Complementary pension payments

respondent

partner

sample

old

middle

young

sample

old

middle

young

known

38%

95%

30%

15%

37%

82%

35%

10%______

unknown

62%

5%

70%

85%

63%

18%

65%

90%______

(n)=

(744)

(173)

(247)

(324)

(320)

(83)

(102)

(135)

Apparently, the respondents, and especially the young ones, know little about their future retirement
income. Based on this observation it was decided to use only the public pension benefit as an indication
of retirement income of the young and middle-age respondents. This means that in (2) the old-age
income of the young (jʃ), which is part of
Yy, is determined by the public pension benefit.

4.2 Estimation results

The coefficients of eqs. (3) can now be estimated. One other remark has to be made in advance, though.
Inspection of the data showed that women are underrepresented in the sample, compared to the Dutch
population. In addition to this, it turned out that not all age categories were present as they should be
according to the statistics of the Dutch Central Bureau of Statistics (see also appendix A). These two
deviations in the sample were taken into consideration by applying weighted least squares (WLS) where



More intriguing information

1. Towards a framework for critical citizenship education
2. Sectoral Energy- and Labour-Productivity Convergence
3. PRIORITIES IN THE CHANGING WORLD OF AGRICULTURE
4. Ultrametric Distance in Syntax
5. A NEW PERSPECTIVE ON UNDERINVESTMENT IN AGRICULTURAL R&D
6. The name is absent
7. On the job rotation problem
8. Locke's theory of perception
9. ASSESSMENT OF MARKET RISK IN HOG PRODUCTION USING VALUE-AT-RISK AND EXTREME VALUE THEORY
10. The name is absent