TY  - JOUR
AU  - Blocker,Alexander W.
AU  - Kotlikoff,Laurence J.
AU  - Ross,Stephen A.
TI  - The True Cost of Social Security
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14427
PY  - 2008
Y2  - October 2008
UR  - http://www.nber.org/papers/w14427
L1  - http://www.nber.org/papers/w14427.pdf
N1  - Author contact info:
Alexander W. Blocker
Harvard University
E-Mail: ablocker@gmail.com

Laurence J. Kotlikoff
Department of Economics
Boston University
270 Bay State Road
Boston, MA 02215
Tel: 617/353-4002
Fax: 617/353-4001
E-Mail: kotlikoff@gmail.com

Stephen A. Ross
MIT Sloan School of Management
100 Main Street, E62-616
Cambridge, MA 02142
Tel: 617/258-8371
Fax: 203/772-1365
E-Mail: sross@mit.edu
AB  - Implicit government obligations represent the lion's share of government liabilities in the U.S. and many other countries.  Yet these liabilities are rarely measured, let alone properly adjusted for their risk.  This paper shows, by example, how modern asset pricing can be used to value implicit fiscal debts taking into account their risk properties.  The example is the U.S. Social Security System's net liability to working-age Americans.  Marking this debt to market makes a big difference; its market value is 23 percent larger than the Social Security trustees' valuation method suggests.
ER  -