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Self-Control preferences and public pension analysis

Author

Listed:
  • Wheadon, Daniel
  • Castex, Gonzalo
  • Kudrna, George
  • Woodland, Alan

Abstract

We study the macroeconomic and fiscal effects of self-control preferences on household saving, labor supply, and public pension design. Building on the framework of Gul and Pesendorfer, we develop a quantitative general equilibrium overlapping generations model in which agents face temptations over both consumption and leisure. We use this model to analyze how varying degrees of self-control costs interact with key pension parameters: the taper rate (means testing), the maximum pension benefit, and the eligibility age. We find that stronger self-control preferences increase reliance on public pensions, amplifying fiscal pressure and altering labor supply patterns, particularly among older workers. Means testing can partially mitigate these effects by encouraging private saving and later retirement but involves trade-offs in taxation and welfare. By incorporating self-control preferences into a macroeconomic framework, we highlight how behavioral biases can influence the performance and fiscal impact of alternative pension policies.

Suggested Citation

  • Wheadon, Daniel & Castex, Gonzalo & Kudrna, George & Woodland, Alan, 2026. "Self-Control preferences and public pension analysis," Journal of Economic Behavior & Organization, Elsevier, vol. 241(C).
    • Handle: RePEc:eee:jeborg:v:241:y:2026:i:c:s016726812500455x
    DOI: 10.1016/j.jebo.2025.107338

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    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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