ABSTRACT
Widespread acceptance of the basic objectives of social security undoubtedly explains its great success, not only in the United States but also in most other economically developed countries. There is sharp disagreement about the proper level and structure of benefits, largely because many people think of social security as a form of insurance. The social costs that result from inadequate provision for retirement are considerable, even if all the aged are guaranteed a subsistence income. Social security is most commonly viewed as a system of mandatory insurance, different in important respects from private insurance, but nonetheless insurance. In practice, social security is a system of payroll taxes that are levied on current earnings of workers and of benefit payments that are based on past earnings of the insured workers. The relationship between individual contributions and benefits received is extremely tenuous.
