1. Silence is Golden? Assessing the Public Debate on Pension Reforms in Europe CEPS, 14 September 2004 Tito Boeri Università Bocconi and Fondazione Rodolfo Debenedetti

2. Outline How informed are citizens about the costs of public pensions? Press-media coverage of pension reforms Involvement of citizens in the public debate Informational content of the public debate Information and opposition to reforms Are there better ways to inform?

3. Key points Individuals poorly informed about individual costs and intergenerational redistribution operated by pension systems Those informed are more prone to support reforms increasing sustainability Press-media coverage not much helpful and may scare people We need more “orange envelopes”

4. How Informed? Public opinion surveys in Germany and Italy, 2000, 2001 and 2004 (also France and Spain in 2000). Individuals were asked about: –aggregate costs –individual costs –intergenerational redistribution operated by public pension systems

5. Aware of the aggregate Budget Constraint? …

6. Aware of unsustainability ?

7. Aware of reforms being parametric?

8. Aware of individual costs?

9. Aware of intergenerational redistribution (PAYG)?

10. Perceived intergenerational redistribution: a lump of labour…. Eurobarometer Survey, 2000

11. … fallacy! (youth unemployment and early retirement)

12. Press coverage

13. Trend in Italy

14. Degree of involvement in the public debate

15. Who decides to be involved? (Italy, 2004)

16. Informational content of the public debate

17. Does attention increase information about individual costs? (Italy, 2004)

18. Does attention increase information about intergenerational redistribution (PAYG) (Italy, 2001 2004)

19. Informational content of the public debate Estimates from propensity score matching

20. Summarising so far Citizens poorly informed Those who choose to be involved have the same characteristics of those more informed. Self-selection bias Attention could increase information about individual costs, less on iintergenerational redistribution and unsustainability

21. 3. Information and opposition to reforms No majority in favour of reforms increasing sustainability Relevant cleavages: –Education –Age –Labour market status –Ideology

22. No reform gains a majority

23. Packaging is problematic

24. Age divide is crucial

27. Who is in favour of increasing the retirement age?

28. There are also costs of information

29. Information does not reduce concerns

30. Press-media coverage may scare people

31. The “announcement effect” Source: fRDB – CeRP calculations on LABOR – Inps data

32. Summarising Those more informed about costs and unsustainability support more reforms increasing sustainability Informed about PAYG more favourable to shrink size But is it due to self-selection or genuine information effects? Costs related to “informing” citizens: announcement (expectational) effects

33. Better ways to inform? The orange envelope