Could pension system make us happier?

Abstract

This paper analyzes the effect of public pension system on lifespan and happiness level using optimal longevity model. This paper found the following. Public pension system can make life expectancy longer, however, the extension of lifespan caused by the public pension, not by own decision, cannot make happiness level higher. Under the government budget constraint, the public pension system cannot make the happiness level higher comparing to private savings. This paper concludes that the compulsory public pension system should be reconsidered because it does not contribute to well-being but raises various problems like aging population and income inequality.