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Indifference Curve Analysis Used on Pension System

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Use indifference curve analysis to show how the Social Security pension system can reduce annual consumption for some workers who have a strong preference for current versus future consumption. What factors will influence the effect of the Social Security system on an individual's well-being and savings rate?

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Solution Summary

The indifference curve analysis used on pension systems are examined.

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Please refer to the attached file for the response.

Future consumption



PC1 U1 U2 U3 Present consumption

Indifference curves Depicting present and future consumptions

The above chart indicates three indifference curves U1, U2, and U3. Among the three curves (supposedly not a straight line but slightly concave upward), an employee who is an SS member would have highest ...

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  • Bachelor of Science in Business Administration, University of the Philippines
  • Master in Business Administration, Saint Mary's University
  • Doctor of Philosophy in Education, University of the Philippines
  • Doctor in Business Adminstration (IP), Polytechnic University of the Philippines
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