The Size and Support for the State Pension Scheme along the Bismarckian-Beveridgean Spectrum: Experimental Evidence from the UK

Survey experiment designed to examine how individuals' preferences for state pensions' size and intragenerational progressivity interact, as well as the underlying behavioural mechanisms. The survey was distributed to a sample of working-age British individuals. In this design, participants select their preferred contribution rate for alternative hypothetical schemes and choose their preferred scheme. We find that progressivity has an inverted-U-shaped effect on preferred contribution rates, and that high-progressivity schemes receive higher support. This study points to different mechanisms. First, while contribution rate choices are relatively inelastic to individual financial incentives, scheme choices are highly sensitive to them. Second, choices are strongly aligned with existing institutional rules, suggesting a prominent role for reference dependence. Finally, heterogeneity analyses show that sensitivity to schemes' progressivity depends strongly on individuals' efficiency concerns and egalitarian orientation.