Most economists accept the need for a required pension system because
A)people will save less than is optimal knowing that they can rely on welfare.
B)people may not have the information necessary to calculate their correct level of savings.
C)economists believe that saving is good for the soul.
D)people will save less than is optimal knowing that they can rely on welfare and people may not have the information necessary to calculate their correct level of savings.

Question

Quizplus · Accepted Answer

Economists believe that people may not save enough for their retirement if they know they can rely on welfare. This behavior is known as moral hazard. Additionally, people may not have the necessary information or knowledge to calculate their optimal savings level. Therefore, a required pension system can help individuals save enough for their retirement and prevent them from becoming a burden on the welfare system.

Most Economists Accept the Need for a Required Pension System