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Retirement Age and Status Quo Bias

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"Retirement Age and Status Quo Bias"

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One thing that I think is often a problem in our policy discussions is status quo bias, a sort of irrational fixation on whatever the current policy happens to be. And I’ll admit that I realized I myself was suffering from some when I read this item from Joshua Keating. To make a long story short, I’m not someone who normally writes enthusiastically about the idea of raising the Social Security retirement age. But when I read that France is going to raise its age from its current level of 60, my first thought was “60! That’s nuts!” But if 60 is nuts, then why not 65? Or if 65 is good, then why not 60?

At any rate, these charts are interesting:

100616_saupload_lfea1 1

We’re stingier than average country in terms of years of retirement, but by no means an outlier.

At any rate, my concern with the idea of raising the retirement age is twofold. One is the pretty obvious point that many jobs are a great deal more physically taxing than the job of the average economist or political pundit. But you could in principle handle this fairly and equitably through the Disability Insurance element of Social Security. The other issue is that as best I can tell from the labor market fate of people in the 50-65 age bracket, employers aren’t exactly chomping at the bit to hire older workers in any capacity. Annie Lowrey has a good piece about this out today mostly in the age discrimination context. It seems to me that if your desire is to see more people in the 60-70 range working, that you have to show me you’re making some progress on creating meaningful labor market opportunities for older people. Just yanking the safety net out isn’t much of a solution.

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