A critical assessment of generational accounting and its contribution to the generational equity debate
Article Sidebar
Main Article Content
Abstract
This article describes generational accounting (GA) with a focus on what it brings to the broader literature on generational equity. Our assessment suggests that the GA model has its limitations but is potentially useful in the hands of analysts who are familiar with both the strengths and limitations of the model. It is most useful when the focus is on dealing with intergenerational equity, but it is much less useful when the focus is on issues related to class, race, and other forms intragenerational equity. We conclude that when GA models are used to support calls for retrenchment of public spending on pensions and other social programs that target the older population, it makes sense to recognize that the potential benefits with respect to government debt and deficit reduction and reduced inequality in net tax burdens across age cohorts may come at the cost of increased intragenerational inequality for many workers and retirees.
Metrics
Article Details
This work is licensed under a Creative Commons Attribution-NonCommercial 3.0 Unported License.
Since 2020 the International Journal of Ageing and Later Life uses a Creative Commons: Attribution license, which allows users to distribute the work and to reform or build upon it without the author's permission. Full reference to the author must be given.
References
Ablett, J. (1996). Budgeting to bridge the inter-generational gap. The Australian, 7 October, p. 21.
Angel, J. L. & Mudrazija, S. (2011). Aging, inheritance, and gift-giving. In R. H. Binstock, L. K. George, S. J. Cutler, J. Hendricks & J. H. Schulz (eds.), Handbook of Aging and the Social Sciences (7th ed., pp. 163–173). Amsterdam: Elsevier. [Read this article]
Attfield, R. (2010). Global warming, equity and future generations. Human Ecology Review 17(2): 102–105.
Auerbach, A. J., Gokhale, J. & Kotlikoff, L. J. (1991a). Generational Accounts – A Meaningful Alternative to Deficit Accounting. Cambridge, MA: National Bureau of Economic Research. Working Paper No. 3589.
Auerbach, A. J., Gokhale, J. & Kotlikoff, L. J. (1991b). Social Security and Medicare Policy from the Perspective of Generational Accounting. Cambridge, MA: National Bureau of Economic Research. Working Paper No. 3915
Auerbach, A. J., Gokhale, J. & Kotlikoff, L. J. (1994). Generational accounting: A meaningful way to evaluate fiscal policy. The Journal of Economic Perspectives 8(1): 73–94. [Read this article]
Auerbach, A. J. & Kotlikoff, L. J. (1999). The methodology of generational accounting. In A. J. Auerbach, L. J. Kotlikoff & W. Leibfritz (eds.), Generational Accounting Around the World (pp. 31–41). Chicago: The University of Chicago Press.
Beard, S. (1996). Restoring Hope in America. San Francisco: ICS Press.
Bessant, J. C., Emslie, M. & Watts, R. (2011). Accounting for future generations: Inter-generational equity in Australia. The Australian Journal of public Administration 70(2): 143–155. [Read this article]
Börstinghaus, V. & Hirte, G. (2001). Generational accounting versus computable general equilibrium. FinanzArchiv 58(3): 227–243. [Read this article]
Broder, D. (1973). Budget funds for elderly grow rapidly. Washington Post, 30 January, p. A16.
Browning, M. & Crossley, T. F. (2001). The life-cycle model of consumption and saving. The Journal of Economic Perspectives 15(3): 3–22. [Read this article]
Buchanan, N. H. (2005). Social Security, Generational Justice, and Long-Term Deficits. Newark, NJ: Rutgers Law School (Newark) Faculty Papers. Working Paper No. 20.
Buchanan, N. H. (2011). What kind of environment do we owe future generations? Lewis & Clark Law Review 15(2): 339–367.
Buiter, W. H. (1997). Generational accounts, aggregate saving and intergenerational distribution. Economica 64: 605–626. [Read this article]
Congressional Budget Office. (1995). Who Pays and When? An Assessment of Generational Accounting. Washington, DC: U.S. Government Printing Office.
Coombs, G. & Dollery, B. (2002). An analysis of the debate on intergenerational equity and fiscal sustainability in Australia. Australian Journal of Social Issues 37(4): 363–381.
Cutler, D. M. (1993). Review of generational accounting: Knowing who pays, and when, for what we spend. National Tax Journal 46(1): 61–67.
Deeg, V., Hagist, C. & Moog, S. (2009). The fiscal outlook in Austria: An evaluation with generational accounts. Empirica 36: 475–499. [Read this article]
Diamond, P. (1996). Generational accounts and generational balance: An assessment. National Tax Journal 49(4): 597–607.
Feist, K. (2003). Generational accounting as a tool for modelling social expenditure in Europe. Futures 35: 49–59. [Read this article]
Ferrara, P. J. (1995). A private option for Social Security. In K. Stephenson (ed.), Social Security: Time for a Change (pp. 205–213). Greenwich, CT: JAI Press.
Foot, D. K. & Venne, R. A. (2005). Awakening the inter-generational equity debate in Canada. Journal of Canadian Studies 39(1): 5–21. [Read this article]
FRFG. (2011). Foundation for the Rights of Future Generations. Available on http://www.inter-generationaljustice.org/ (Accessed: July 10, 2011).
Gál, R.I. & Tarcali, G. (2008). Pension reform and intergenerational redistribution. In R. I. Gál, I. Iwasaki & Z. Széman (eds.), Assessing Intergenerational Equity (pp. 139–153). Budapest: Akadémiai Kiadó .
Gokhale, J. & Kotlikoff, L. J. (2001). Is War Between the Generations Inevitable? Dallas, TX: National Center for Policy Analysis. Policy Report No. 246.
Gokhale, J., Page, B., Potter, J. & Sturrock, J. (2000). Generational accounts for the United States: An update. The American Economic Review 90(2): 293–296. [Read this article]
Gray, C. (1997). Are we in store for some inter-generational warfare? Canadian Medical Association Journal 157(8): 1123–1124.
Haveman, R. (1994). Should generational accounts replace public budgets and deficits? The Journal of Economic Perspectives 8(1): 95–111. [Read this article]
Helliwell, J. F. (1998). What will we be leaving you? In M. Corak (ed.), Government Finances and Generational Equity (pp. 141–147). Ottawa, Canada: Statistics Canada, Minister of Industry.
Hudson, R. B. (1978). The ‘graying’ of the federal budget and its consequences for old-age policy. The Gerontologist 18(5): 428–440. [Read this article] PMid:263559
Inter-generational Foundation. (2011). Inter-generational Foundation: Fairness for Future Generations. Available on http://www.inter-generational.org.uk/ (Accessed: July 11, 2011).
Itoh, M. (2005). Insights into the World: demographic changes will strain government coffers. The Daily Yomiuri, 27 November, p. 10.
Kingson, E. R. (2007). Generations at war: The sequel. Together 14(2): 5–6.
Kingson, E. R., Hirshorn, B. A. & Cornman, J. M. (1986). Ties That Bind: The Interdependence of Generations. Washington, DC: Seven Locks Press.
Kingson, E. R. &Williamson, J. B. (1999). Why privatizing Social Security is a bad idea. In J. B. Williamson, D. M. Watts-Roy & E. R. Kingson (eds.), The Generational Equity Debate (pp. 204–219). New York, NY: Columbia University Press.
Kohli, M. (2008). Generational equity: Concepts and attitudes. In C. Arze & M. Kohli (eds.), Pension Reform in Europe: Politics, Policies and Outcomes (pp. 196–214). London: Routledge.
Kohli, M.(2011). Generations in aging societies: Inequalities, cleavages, conflicts. Paper presented at Conference on Ageing in the Twentieth Century, European University Institute, Florence, May 26–27.
Kotlikoff, L. J. (1992). Generational Accounting: Knowing Who Pays, and When, for What We Spend. New York, NY: The Free Press.
Kotlikoff, L. J. (1996). Privatizing Social Security at home and abroad. The American Economic Review 86(2): 368–372.
Kotlikoff, L. J. & Burns, S. (2004). The Coming Generational Storm. Cambridge, MA: The MIT Press.
Kotlikoff, L. J. & Raffelhüschen, B. (1999). Generational accounting around the globe. The American Economic Review 89(2): 161–166. [Read this article]
Lamm, R. D. (1989). Columbus and Copernicus: New wine in old wineskins. Mount Sinai Journal of Medicine 56(1): 1–10.
Lee, C.-I. & Solon, G. (2009). Trends in intergenerational income mobility. Review of Economics and Statistics 91(4): 766–772. [Read this article]
Longman, P. (1985). Justice between generations. Atlantic Monthly 256(June): 73–81.
Longman, P. (1987). Born to Pay: The New Politics of Aging in America. Boston: Houghton Mifflin.
Lucier, J. P. (1997). Between the Hammer and the Anvil. The Washington Times, 1 January, p. A13.
Marmor, T. R., Cook, F. L. & Scher, S. (1999). Social Security and the Politics of Generational Conflict. In J. B. Williamson, D. M. Watts-Roy & E. R. Kingson (eds.), The Generational Equity Debate (pp. 185–203). New York: Columbia University Press.
McCarthy, D., Sefton, J. & Weale, M. (2011). Generational Accounts for the United Kingdom. London: National Institute of Economic and Social Research. Discussion Paper No. 377.
Norton, R. (1995). Cheating tomorrow’s children even the ‘‘tough’’ spending cuts proposed by Republicans would still stick future generations with an unbearable fiscal burden. Fortune, 10 July, p. 33.
Peterson, P. G. (1996). Will American Grow Up Before It Grows Old? New York: Random House.
Prušvic, D. & Pavlokovaá , K. (2010). Generational accounting in European health care systems. Finance a úvěr [Czech Journal of Economics and Finance] 60(5): 378–399.
Raffelhüschen, B. (1999). Generational accounting in Europe. The American Economic Review 89(2): 167–170. [Read this article]
Sabbagh, C. & Vanhuysse, P. (2010). Intergenerational justice perceptions and the role of welfare regimes. Administration & Society 42(6): 638–667. [Read this article]
Sebald, A. & de Neubourg, C. (2003). Paying for pensions and other public expenditures: Overtaxing our children? Presented at the International Micro-simulation Conference, December 8–12, Canberra, Australia.
Takayama, N., Kitamura, Y. & Yoshida, H. (1999). Generational accounting in Japan. In A. J. Auerbach, L. J. Kotlikoff & W. Leibfritz (eds.), Generational Accounting Around the World (pp. 447–469). Chicago: The University of Chicago Press.
WFC. (2007). World Future Council: Voice of future generations. Vision, Mission and Values. Available on http://www.worldfuturecouncil.org/vision.html (Accessed: July 11, 2011).
What If. (2011). What If: Sustainability as Inter-generational Fairness. Available on http://www.whatif-ja.org/ (Accessed: July 12, 2011).
Wilcox, D. W. (1989). Social Security benefits, consumption expenditure, and the life cycle hypothesis. The Journal of Political Economy 97(2): 288–304. [Read this article]
Williamson, J. B. & Watts-Roy, D. M. (2009). Aging boomers, generational equity, and framing the debate over Social Security. In R. B. Hudson (ed.), Boomer Bust? Economic and Political Issues of the Graying Society (Vol. 1, pp. 153–169). Westport, CT: Praeger.
Williamson, J. B., Watts-Roy, D. M. & Kingson, E. R. (eds.) (1999). The Generational Equity Debate. New York, NY: Columbia University Press.