We attempt to draw inferences about potential behavioral responses to means-testedquot; income support for the elderly by examining the effects on saving of the Supplemental Securityquot; Income (SSI) program for the aged in the U.S. Part of the SSI program provides payments to thequot; poor...

If there is a means tested basic income for old age, households will tend to reduce precautionary savings to an inefficiently low level. This might serve as a justification for a public pension system. In a representative agent framework, indeed, the introduction of a compulsory pension s ystem...