By Don Fullerton, Brent D. Mast, AEI Press, January 2005

Social Security, in 1935, was intended to provide for elderly individuals without adequate sources of income. And it has a progressive benefit schedule that replaces a higher percentage of past earnings for those with low past earnings than for those with high past earnings. For both these reasons, the U.S. Social Security system was thought to redistribute income from rich to poor--until recently, that is. Several research teams recently developed data and models that show a more complete picture of how much the U.S. Social Security system actually redistributes income.

It is important to know as much as possible about how the current Social Security system redistributes money in practice and to whom. It may never be ascertained how much Social Security really helps the poor, or indeed whether it redistributes money toward people who are already well-to-do.

Don Fullerton is the Addison Baker Duncan Centennial Professor of Economics at the University of Texas Austin. Brent Mast is a statistician at the U.S. Department of Justice.

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