Robert Shiller takes a long time to get to the payoff here, but this seems like a smart idea to me:
But, basically, we can keep traditional pensions by changing how we compute them. We should use a formula so that guaranteed future income in retirement bears a fixed relationship to a state’s future ability to pay — as measured, for example, by that state’s economic output.
It is that simple: Just scrap the current indexing of pensions to the Consumer Price Index and replace it with a link to the state’s gross domestic product.
I don’t really want to propose revolutionizing the pension system based on one article I read in The New York Times, but I’d be interested in hearing more discussion of this idea since it makes sense to me. Thanks to RY for the pointer.
Previous in TP Yglesias
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