Abstract:
Why are the old politically successful? We build a simple interest group model in which political pressure is time-intensive, showing that in the political competitive equilibrium each group lobbies for government policies that lower their own value of time but that - because of their shorter horizons - the old do so to a greater extent and as a result are net gainers from the political process. The model has a variety of implications for the design of social security programs, which we test using data from the Social Security Administration. The model also predicts that the social security programs with retirement incentives are larger and that the old spend more time in political activities, implications which we verify using cross-country government finance data, cross-country political participation surveys, and U.S. time diary data. We also offer a very different interpretation of the same model in terms of the "single-mindedness" of political participants.
mimeo, Columbia University, January 1998.