Actuaries Confirm That Latest Scare Talk on Social Security Is Off-Base
We’ve debunked the claim in a recent New York Times op-ed that Social Security’s official long-term financial projections are based on outdated and inaccurate assumptions and thus are too optimistic. The Social Security actuaries, who develop those projections, have issued their own analysis that responds to the Times piece, explaining why it is off-base.
Here are two key points from the actuaries’ analysis, which reinforces our earlier post:
- The op-ed’s claim that the projections don’t reflect recent trends in smoking and obesity is simply incorrect. The actuaries carefully weigh these and many other factors that will affect future mortality. The authors of the Times column, Samir Soneji and Gary King, were wrong to assert otherwise. As the actuaries explain:
The essence of King and Soneji’s assertion is their misimpression that the Office of the Chief Actuary’s mortality projection methods do not reflect the effects of smoking and obesity. In fact, both smoking and obesity are already reflected in historical data and the actuaries’ projection methods. King and Soneji develop a projection they refer to as “Crazy Death Rates” by, in some way, adding their estimated effects for smoking and obesity to the actuaries’ projections. This addition therefore “double counts” the effects of smoking and obesity and yields truly “crazy” results.
- Social Security’s finances depend on many complex factors, not just the one factor — mortality — that the op-ed examined. Future fertility, immigration, economic growth, and many other variables also influence the program’s outlook.
Every four years the actuaries solicit the views of an independent panel of some of the nation’s best demographers, economists, and actuaries. While the latest panel suggested that the actuaries may have slightly underestimated future improvements in mortality, it judged that, overall, the actuaries’ projections of Social Security’s long-term finances were slightly too pessimistic.
Long-run projections of Social Security — a popular and successful program that affects nearly every American — are inherently uncertain, and they are updated every year to reflect new developments, data, and methods. But the actuaries have a long and well-deserved reputation for being credible and reasonable.