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Silence is Golden? Assessing the Public Debate on Pension Reforms in Europe

Silence is Golden? Assessing the Public Debate on Pension Reforms in Europe. CEPS, 14 September 2004 Tito Boeri Università Bocconi and Fondazione Rodolfo Debenedetti. Outline. How informed are citizens about the costs of public pensions? Press-media coverage of pension reforms

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Silence is Golden? Assessing the Public Debate on Pension Reforms in Europe

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  1. Silence is Golden? Assessing the Public Debate on Pension Reforms in Europe CEPS, 14 September 2004 Tito Boeri Università Bocconi and Fondazione Rodolfo Debenedetti

  2. Outline • How informed are citizens about the costs of public pensions? • Press-media coverage of pension reforms • Involvement of citizens in the public debate • Informational content of the public debate • Information and opposition to reforms • Are there better ways to inform?

  3. Key points • Individuals poorly informed about individual costs and intergenerational redistribution operated by pension systems • Those informed are more prone to support reforms increasing sustainability • Press-media coverage not much helpful and may scare people • We need more “orange envelopes”

  4. How Informed? • Public opinion surveys in Germany and Italy, 2000, 2001 and 2004 (also France and Spain in 2000). • Individuals were asked about: • aggregate costs • individual costs • intergenerational redistribution operated by public pension systems

  5. Aware of the aggregate Budget Constraint? …

  6. Aware of unsustainability?

  7. Aware of reforms being parametric?

  8. Aware of individual costs?

  9. Aware of intergenerational redistribution (PAYG)?

  10. Perceived intergenerational redistribution: a lump of labour…. Eurobarometer Survey, 2000

  11. … fallacy!(youth unemployment and early retirement)

  12. Press coverage

  13. Trend in Italy

  14. Degree of involvement in the public debate

  15. Who decides to be involved?(Italy, 2004)

  16. Informational content of the public debate

  17. Does attention increase information about individual costs?(Italy, 2004)

  18. Does attention increase information about intergenerational redistribution (PAYG)(Italy, 2001 2004)

  19. Informational content of the public debateEstimates from propensity score matching

  20. Summarising so far • Citizens poorly informed • Those who choose to be involved have the same characteristics of those more informed. Self-selection bias • Attention could increase information about individual costs, less on iintergenerational redistribution and unsustainability

  21. 3. Information and opposition to reforms • No majority in favour of reforms increasing sustainability • Relevant cleavages: • Education • Age • Labour market status • Ideology

  22. No reform gains a majority

  23. Packaging is problematic

  24. Age divide is crucial

  25. Who is in favour of increasing the retirement age?

  26. There are also costs of information

  27. Information does not reduce concerns

  28. Press-media coverage may scare people

  29. The “announcement effect” Source: fRDB – CeRP calculations on LABOR – Inps data

  30. Summarising • Those more informed about costs and unsustainability support more reforms increasing sustainability • Informed about PAYG more favourable to shrink size • But is it due to self-selection or genuine information effects? • Costs related to “informing” citizens: announcement (expectational) effects

  31. Better ways to inform? The orange envelope

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