ABSTRACT
THE varied systems of social security administration adopted by different countries are a reflection of the manifold influences that bear on the decision to use one system as against another. Whatever the reasons may have been for the adoption of a particular administrative system, it must attempt to meet at least three aims. Economic efficiency is obviously the first of these aims. As a large business, it is important to beneficiaries and taxpayers that social security uses the least costly administrative system. Money saved on administration can be used for higher benefits. Economic considerations, however, are rarely the deciding factor. In the first place it is not always possible to demonstrate that one system is more economical than another. The use of an ‘insurance’ system which pays benefits to all who satisfy certain insurance conditions without any investigation into the beneficiaries' personal circumstances is less costly to administer than an ‘assistance’ system which pays benefits only after a full personal investigation of each and every claim. On the other hand the ‘insurance’ system is more wasteful than the ‘assistance’ system since it pays benefits to a number of people who do not need them. On purely financial considerations it is not possible to decide which is the better of these two systems. In the second place there are usually strong historical and political reasons which favour one particular system irrespective of costs. The resentment of the means test in the U.K., the fear of disturbing the balance of power between federal and state authorities in the U.S.A., the wish to maintain active participation of members in the affairs of the insurance funds in Denmark, are illustrations of the influence of historical, political and other factors. Whether the ‘insurance’ or the ‘assistance’ system or a combination of both is adopted, administrative efficiency is still one of the top priorities.
