Analysis of the Solvency of the Social Security Fund.
AIR FORCE INST OF TECH WRIGHT-PATTERSON AFB OH
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The purpose of this thesis is to aid policymakers in the management of the Social Security system. A methodology is proposed, posed in a decision-analytic framework, for systematically assessing alternative future demographic, economic and cultural outcomes and for recommending appropriate tax rates on a regular basis. Currently, options are selected in response to a given scenario, but they may not be robust in the face of unanticipated outcomes. The proposed methodology significantly lessens the forecasting task by reducing the number of specific point estimates required for deterministic models now in use. By lumping the unexplained portion of the underlying dynamics into random variables, the inherent variability of the process is modelled more realistically and, at the same time, the effects of changing the structure of these parameters over the full length of the planning cycle are tested more easily. The risk associated with any decision is explicitly identified based on variances of outcomes, thus allowing decisionmakers the opportunity to compare alternative strategies and to highlight constraints on future choices.
- Administration and Management
- Economics and Cost Analysis