TY - JOUR AU - Liebman, Jeffrey B AU - Luttmer, Erzo F.P. TI - The Perception Of Social Security Incentives For Labor Supply And Retirement: The Median Voter Knows More Than You'd Think JF - National Bureau of Economic Research Working Paper Series VL - No. 20562 PY - 2014 Y2 - October 2014 DO - 10.3386/w20562 UR - http://www.nber.org/papers/w20562 L1 - http://www.nber.org/papers/w20562.pdf N1 - Author contact info: Jeffrey B. Liebman John F. Kennedy School of Government Harvard University 79 JFK Street Cambridge, MA 02138 Tel: 617/495-8518 Fax: 617/496-9053 E-Mail: jeffrey_liebman@harvard.edu Erzo F.P. Luttmer 6106 Rockefeller Center, Room 305 Department of Economics Dartmouth College Hanover, NH 03755 Tel: 603/646-6479 E-Mail: Erzo.FP.Luttmer@Dartmouth.Edu M1 - published as Jeffrey B. Liebman, Erzo F. P. Luttmer. "The Perception of Social Security Incentives for Labor Supply and Retirement: The Median Voter Knows More Than You'd Think," in Jeffrey Brown, editor, "Tax Policy and the Economy, Volume 26" University of Chicago Press (2012) AB - The degree to which the Social Security tax distorts labor supply depends on the extent to which individuals perceive the link between current earnings and future Social Security benefits. Some Social Security reform plans have been motivated by an assumption that workers fail to perceive this link and that increasing the salience of the link could result in significant efficiency gains. To measure the perceived linkage between labor supply and Social Security benefits, we administered a survey to a representative sample of Americans aged 50-70. We find that the majority of respondents believe that their Social Security benefits increase with labor supply. Indeed, respondents generally report a link between labor supply and future benefits that is somewhat greater than the actual incentive. We also surveyed people about their understanding of various other provisions in the Social Security benefit rules. We find that some of these provisions (e.g., effects of delayed benefit claiming and rules on widow benefits) are relatively well understood while others (e.g., rules on spousal benefits, provisions on which years of earnings are taken into account) are less well understood. In addition, our survey incorporated a framing experiment, which shows that how the incentives for delayed claiming are presented has an impact on hypothetical claiming decisions. In particular, the traditional "break-even" framing used by the Social Security Administration leads to earlier claiming than other presentations do. ER -