Author： Kelley Dashle
Publisher： Springer Publishing Company
ISSN： 0048-5829
Source： Public Choice, Vol.158, Iss.1-2, 2014-01, pp. : 21-38
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Abstract
This paper applies a public choice approach to the problem of unfunded pension liabilities and adopts the methodology of Congleton and Shughart (1990) to model underfunding of state-level public pension plans using the median voter theorem, along with the theory of “capture” by special interest groups, and a combined model of the two. With panel data from 2001 to 2009, the paper finds that the combined model provides the strongest explanation for the current levels of unfunded liabilities; hence, both median voter preferences and special interest group influence are affecting political outcomes. The special interest group model slightly outperforms the median voter model in direct comparisons.
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