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Income Redistribution and Social Security: A Response

In his recent article in Social Service Review,1 Sheldon Danziger provided further evidence to support the conclusion of my earlier article, also published in Social Service Review.2 In my article, I reorganized published data to show redistributive impacts of social security and public assistance on total income received by families of various income classes, particularly those with low incomes. I concluded that social security, though less "target" efficient (or economically efficient), does in fact redistribute more income to low-income families than does public assistance. However, due to the secondary nature of the data and inaccessibility of computerized data, I could not disaggregate the groupings into demographic groups. Danziger had access to computer tapes of similar data and was able to accomplish such disaggregation. Furthermore, he was able to compute changes in mean income and Gini coefficients, which were attributable to social security benefits and could also view the net effect of public assistance payments. He thus showed, in a systematic and analytical manner, the overall effects of social security and public assistance. With his data and analysis, he supported the essence of my argument, that social security has a greater potential for income redistribution than does public assistance. This response comments on Danziger's conceptual framework for calculating changes in mean income and Gini coefficients. It also explores research problems which derive from his observation on the increasing degree of inequality in income.