If you save more because Social Security allows you to retire earlier than you would have retired had Social Security neither taxed you nor provided you with benefits, then this is referred to by economists as the
A)slovenly effect.
B)bequest effect.
C)induced retirement effect.
D)asset substitution effect.

Question

Quizplus · Accepted Answer

The induced retirement effect refers to the situation where individuals retire earlier than they would have without Social Security because they receive retirement benefits from the program. This effect is often attributed to the fact that Social Security provides a steady and guaranteed income stream, making it easier for people to plan and save for retirement. As a result, individuals may choose to retire earlier than they would have otherwise, leading to an earlier exit from the labor force and an increase in savings. The other options (slovenly effect, bequest effect, and asset substitution effect) do not accurately describe this phenomenon.

If You Save More Because Social Security Allows You to Retire