More ‘Little Black Lies’

by on January 30, 2005 at 7:10 am in Economics | Permalink

Black life expectancy is lower than white life expectancy.  On this basis, President Bush argues that social security is a worse deal for blacks than whites.  Paul Krugman says this is a lie but his primary counter-argument is shockingly weak:

Mr. Bush’s remarks on African-Americans perpetuate a crude misunderstanding about what life expectancy means. It’s true that the
current life expectancy for black males at birth is only 68.8 years –
but that doesn’t mean that a black man who has worked all his life can
expect to die after collecting only a few years’ worth of Social
Security benefits. Blacks’ low life expectancy is largely due to high
death rates in childhood and young adulthood. African-American men who
make it to age 65 can expect to live, and collect benefits, for an
additional 14.6 years – not that far short of the 16.6-year figure for
white men.

True, life expectancy at birth isn’t the right statistic but neither is life-expectancy at 65.  Consider the following simple example: suppose that 95 percent of blacks die before the age of 65 but that the 5% who survive to 65 have the same life expectancy as whites.  Krugman would then claim that social security isn’t discriminatory, but that would be absurd – 95 percent of blacks would be paying payroll taxes for all of their working lives and in return they would receive nothing.

As HedgeFundGuy points out a more relevant measure of life expectancy for social security is life expectancy at 20, when working-life begins, and at this age black life-expectancy is still a significant 6 years less than that of whites.

Life expectancy isn’t the only thing that affects social security redistribution, however, marriage rates, number of dependents, disability, income and even the time pattern of income matter also.  It may be that when all of these considerations are taken into account that on average social security is no worse a deal for blacks than for whites but this will be true only because social security is a hash of redistributionist tendencies few of which are well understood let alone well justified.

Addendum: See also Heritage’s rebuttal which makes a number of other good points especially the fact that lumping in the disability program with social security is not appropriate.  Although the programs are connected historically they can, are, and should be treated as independent for purposes of reform and analysis.

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