The asset-substitution effect of Social Security pensions discourages saving.

Question

Quizplus · Accepted Answer

The asset-substitution effect of Social Security pensions refers to the fact that individuals may reduce their personal saving in response to the expected income from their Social Security benefits. This is because they perceive their future income needs as being partially met by their Social Security benefits and therefore feel that they need to save less.

The Asset-Substitution Effect of Social Security Pensions Discourages Saving