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* The elasticity of altruism is positive (about 0.3) for the youngest generations but certainly not
positive for the older generation. The elasticities of fairness are in the same order among generations.
The size of the fairness elasticities is considerably smaller than the size of the altruism elasticities.
* Individuals’ own income has a significantly smaller impact on utility for the elderly compared to
the impact for the young generation.
5. Concluding remarks
This paper discusses the possible effect of feelings of altruism and / or fairness on the evaluation of
the public pension system. In general, it is assumed that utility of individuals is determined by their
own current and (expected) future incomes. In addition to this, it is supposed here that feelings of
altruism, expressed by the incomes of members of other generations, and senses of justice could have
an impact on people’s utility. These elements are introduced via the assumption that income of other
generations and rates of return also affect someone’s own utility. The data used for estimating the utility
functions have been obtained from a large-scale survey carried out among a representative sample of
the Dutch population in January 1994. The main topic of the questionnaire is the evaluation of several
changes in the public pension system that have varying income effects for different generations. By
stating their preferences, respondents also implicitly give information on the degree to which other
generations’ utility affects their own utility.
The analysis shows that altruism and / or fairness, which in general are not included in studies in the
fields of pensions, have a substantial impact on lifetime utility. Altruism towards other generations is
present among the working population (the young and middle-aged generation), but seems to be absent
among the elderly. Fairness plays an important role for all generations. It also appears that it is difficult
to discriminate between altruistic feelings and fairness motives. Partly, this can be ascribed to statistical
reasons, but in part it is also due to the fact that individuals themselves do not make a clear distinction
between these concepts. In view of the multicollinearity problems, it is striking that the optimal fairness
ratios, as desired by the various generations, have a very robust character.