The Role of Stock-Flow Reasoning in Understanding the Social Security Trust Fund

03/31/2023

For American workers anticipating receiving Social Security retirement benefits, the solvency of the Social Security system is a relevant and pressing concern. The OASDI Social Security trust funds represent the accumulated surplus that remains from payroll tax income paid into the system by current workers minus benefits paid out to current beneficiaries. Current projections are that the combined OASDI funds, including both Old-Age and Survivors Insurance (retirement) and DI (Disability Insurance) trust funds, will be depleted by 2035.

Communicating the implications of these projections is critical but prone to inducing misleading inferences. One common misperception is that Social Security benefits will cease to be paid once the trust funds are exhausted. In The Role of Stock-Flow Reasoning in Understanding the Social Security Trust Fund (NBER RDRC Working Paper NB22-15), researchers Megan Weber, Hal Hershfield, Stephen Spiller, and Suzanne Shu explore how communication about the trust funds impacts understanding of the situation.

In one study, the researchers recruited 1,000 participants through Amazon’s Mechanical Turk and randomly assigned them to one of two conditions. The stock condition group was presented with a graph showing the historical and projected trust fund balance for the period 1994 through 2034. In the graph, the balance peaked in 2020 and declined to near zero by the end of the period. The flow condition group was presented with a graph showing the historical and projected OASDI total income and expenditures for 1994 through 2034. In this graph, annual expenditures exceeded annual income beginning in 2021, but both income and costs continued to increase beyond that time. Both groups were given a brief explanation of the trust funds that includes the 2021 and 2035 dates (when costs began to exceed income and when depletion is projected, respectively) and a short text description of their graph.

The authors found that those shown the stock graph were more accurate in their understanding of when trust fund depletion would happen — 80 percent of this group correctly identified that this would happen in 2035, versus 72 percent of the flow group. This finding is notable given that the 2035 date was in the text given to both groups. However, when it came to understanding what would happen to benefits at the time of depletion, those in the stock condition group were more likely to incorrectly answer that benefits would end — 64 percent of the stock group gave this response, versus 56 percent of the flow group.

In a second experiment, the authors added information on “payable benefits” to the flow graph on income and costs (which shows benefit amounts dropping but not going away in 2035). Contrary to expectations, providing this information did not mitigate misunderstanding about what happens to benefits at trust fund depletion, providing evidence of the “stickiness” of this misconception.

In a third experiment, the authors asked participants to consider whether Social Security would continue to collect payroll taxes after depletion and how that tax revenue would be used. A very large majority — 90 percent of the sample — believed that inflows would continue. Those participants who were asked to reflect on how inflows would be used before being asked what would happen to benefits at trust fund depletion were more likely to correctly answer that partial benefits would be paid (47 percent vs. 30 percent). These results “point to this kind of targeted reflection being a promising technique for harnessing citizen beliefs about the continuity of taxes to reinforce expectations for the continuity of benefits. It is also informative about the process by indicating that participants are capable of the necessary stock-flow reasoning here. They may merely be unlikely to engage in it unless otherwise prompted.”

In concluding, the authors note, “it is important that the public fully understand the situation in order to make informed decisions — both for their own retirement planning and in forming policy preferences. This work contributes to a deeper understanding of how communication about this complex policy topic can influence public understanding and discourse.”


The research reported herein was performed pursuant to grant RDR18000003 from the US Social Security Administration (SSA) funded as part of the Retirement and Disability Research Consortium. The opinions and conclusions expressed are solely those of the author(s) and do not represent the opinions or policy of SSA, any agency of the federal government, or NBER. Neither the United States Government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of the contents of this report. Reference herein to any specific commercial product, process or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply endorsement, recommendation or favoring by the United States Government or any agency thereof. This project was also supported by grant number T32HS026128 from the Agency for Healthcare Research and Quality. The content is solely the responsibility of the authors and does not necessarily represent the official views of the Agency for Healthcare Research and Quality. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.