Seesaws and Social Security Benefits Indexing

Matthew  Weinzierl

Article | Brookings Papers on Economic Activity | Fall 2014

Seesaws and Social Security Benefits Indexing

Abstract

The price indexation of Social Security benefit payments has emerged in recent years as a flashpoint of debate in the United States. I characterize the direct effects that changes in that price index would have on retirees who differ in their initial wealth at retirement and in their mortality rates after retirement. I propose a simple but flexible theoretical framework that converts benefits reform first into changes to retirees' consumption paths and then into a net effect on social welfare. I calibrate that framework using recently produced data on Social Security beneficiaries by lifetime income decile and both existing and new survey evidence on the normative priorities Americans have regarding their Social Security benefits. The results suggest that the value retirees place on protection against longevity risk is an important caveat to the widespread enthusiasm for a switch to a slower-growing price index such as the chained CPI-U.

Keywords: Retirement; Compensation and Benefits; United States;

Format: Print

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Citation:

Weinzierl, Matthew. "Seesaws and Social Security Benefits Indexing." Brookings Papers on Economic Activity (Fall 2014): 137–196.

Case | HBS Case Collection | April 2020 (Revised June 2020)

SpaceX, Economies of Scale, and a Revolution in Space Access

Matthew C. Weinzierl, Kylie Lucas and Mehak Sarang

From the time he transformed the world of online banking, Elon Musk established himself as a bold innovator. After selling X.com to PayPal in 2002, he founded a series of revolutionary start-ups, starting with Space Exploration Technologies (SpaceX). Hoping to "make human life multiplanetary", Musk aimed to establish the first Mars civilization, but was unable to procure rockets that would be cheap or reliable enough to make the journey. Over the course of the next decade, SpaceX developed a line of revolutionary rockets that transformed the commercial space launch industry. Using reusable rockets to exploit the benefits of economies of scale, SpaceX cut costs to orbit by a factor of 18 and captured a large percentage of the global launch market, once thought to be inaccessible to newcomers in the industry. But after a remarkable decade, Musk's original goal to reach Mars seemed both within reach and impossibly optimistic. SpaceX developed technologies that would be critical in supporting a crewed mission to Mars, but the cost to get there was estimated to be well above $200 billion dollars in 2014, nowhere near revenues from the launch services market. Would there be enough demand for launch services to make Elon Musk's vision a possibility, or would SpaceX have to find other ways to get there?

Keywords: space tech; space access; vision; Economies of Scale; Technological Innovation; Emerging Markets; Commercialization; Finance; Aerospace Industry;

Citation:

Weinzierl, Matthew C., Kylie Lucas, and Mehak Sarang. "SpaceX, Economies of Scale, and a Revolution in Space Access." Harvard Business School Case 720-027, April 2020. (Revised June 2020.) View Details

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Seesaws and Social Security Benefits Indexing

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