Pension, Behavioural Economics, Public Policy, Social Security
Abstract
This study aims to analyse the problems of the Chinese pension market and test whether the current solutions are effective. It combines two ideas of pension reform: privatisation and Richard Thaler’s “Save More Tomorrow” (SMT). A questionnaire was distributed to 577 interviewees to test whether these policies could work for them. The results are analysed using the Z-test and ANOVA test to examine the hypotheses. The results show that privatisation will fail at solving the pension crisis because people are insufficiently informed about the conditions in the pension market. Furthermore, they are more willing to invest to other areas other than private pensions. On the other hand, SMT will be effective as the money illusion makes people ignore the increase in pension rate when their wages increase at the same time. It provides a better policy for the Chinese government to solve the pension crisis. Furthermore, it also shows that the non-neoclassical paradigm can be effectively applied to policymaking.
