MEDICARE FROM THE PERSPECTIVE OF GENERATIONAL ACCOUNTING: Comparing U.S. Generational Accounts

Comparing U.S. Generational Accounts to Those of Other Developed Countries

Table 3, gleaned from Kotlikoff and Leibfritz (1998), compares U.S. generational accounts with those of Japan, Germany, Italy, Canada, and France. All Table 3 entries are in 1995 dollars. Unlike Tables 1 and 2, which incorporate a 6 percent discount rate and a 1.2 percent labor productivity growth rate, Table 3 assumes a 5 percent discount rate and a 1.5 percent labor productivity growth rate. It also combines males and females in reporting the overall remaining lifetime net tax payment of different generations.

Generation’s age in 1995 UnitedStatesJapanGermanyItalyCanadaFrance
086.3175.1221.8155.2145.3194.5
5102.0206.7261.2180.6166.2246.1
10121.7244.3314.2209.4194.1294.5
15144.6288.0387.0242.4225.9339.9
20168.7339.6448.4262.9254.2390.8
25175.4360.4416.3250.5234.6413.2
30170.0363.6365.3210.9241.5377.0
35157.5350.9301.6154.2211.0311.6
40135.7322.1215.286.1175.4214.1
45101.3278.0126.314.5126.399.5
5056.4211.4-5.6-63.666.2-16.0
554.0120.9-132.9-140.17.4-172.9
60-51.714.5-246.8-192.9-57.9-252.9
65-96.0-58.2-277.8-187.9-108.2-256.6
70-104.6-54.7-242.9-159.6-113.8-194.5
75-101.9-44.0-201.9-128.7-109.3-208.1
80-89.5-32.6-147.3-98.1-103.3-120.5
85-74.4-22.2-91.4-71.6-88.6-132.1
90-56.7-11.8-4.3-10.1-14.0-121.2
FuturegenerationsGenerationalimbalance130.4471.6425.8359.8145.6286.0
Absolute44.1296.5204.0204.60.391.5
In per cent51.1169.392.0131.80.047.1

In addition, to ease cross-country comparisons, the generational accounts of all the foreign countries are scaled by the ratio of 1995 U.S. per capita GDP to the country’s 1995 per capita GDP. For example, U.S. per capita GDP in 1995 was 1.28 times larger than France’s per capita GDP. Hence, we multiplied the French generational account values by 1.28 before recording them in Table 3. By scaling the foreign country accounts in this manner we can immediately consider whether particular cohorts in particular countries have particularly high or low generational accounts compared with those in the U.S. after controlling for the relative living standards and levels of economic activity in those countries. More info