شرکت دوست دار بیچارگان : شوک های برونزاد در توقعات بازنشستگی و اثرات مقایسه اجتماعی در رفاه ذهنی

This study investigates the effects of social comparison accompanying a substantial reform of the Dutch pension system on the job satisfaction of workers who are close to retirement. The reform implies that public sector workers born on January 1, 1950, or later face a considerable reduction in their pension rights, while workers born before this threshold date can still retire under the old, more generous rules. Using unique matched survey and administrative panel data on male public sector workers born in 1949 and 1950, we find strong and persistent effects on job satisfaction that are sizable compared to income effects on well-being. The drop in satisfaction is strongly affected by social comparisons with colleagues. Treated workers are less affected by the reform when the treatment group is larger in the organization where they are employed. Moreover, the social comparison effect is especially prevalent in organizations that stimulate their employees to work full-time and in teams. We also find evidence that the major part of the social comparison effect is non-monetary.

People feel less happy when the situation in which they find themselves compares unfavorably with that of others. The relevance of such social comparisons for subjective well-being in the realm of incomes was first noticed by Easterlin, 1974 and Easterlin, 1995. Easterlin appealed to concepts of social comparison and adaptation to income to explain why average happiness in developed countries does not significantly rise over time as these countries become richer, whereas within a country richer people tend to be significantly happier than poorer people (the Easterlin paradox). Social comparison implies that the utility of individuals does not so much depend on the absolute level of their income but, rather, on the level of their income relative to that of others in their social reference group. A substantial theoretical and empirical literature has investigated the relevance and implications of social income comparisons for subjective well-being. Recent empirical studies generally found that there exists a systematic relative income effect on well-being (e.g., Clark and Oswald, 1996, Van Praag and Ferrer-i-Carbonell, 2004, Ferrer-i-Carbonell, 2005, Luttmer, 2005, Vendrik and Woltjer, 2007, Clark et al., 2008b, Layard et al., 2010 and Clark and Senik, 2010). However, with the exception of a few experimental studies that controlled the reference group (see Carter and McBride, 2009 and Card et al., 2010), most empirical studies assumed reference groups that were only proxies of the actual, unobserved reference groups, leading to problems of measurement error and endogenous variation in the income of the relevant reference groups.1 This study examines the extent to which social comparisons between colleagues drive the effects of a drastic change in the retirement system for the Dutch public sector on the job satisfaction of older workers. By exploiting the shock in the retirement system, we avoid the problems of potential spurious correlations and measurement error that may have biased the results in previous retirement and social comparison studies. More specifically, in 2006, the Dutch public sector was subject to a major pension reform that treated two very similar groups of employees differently. Prior to 2006, public sector workers in the Netherlands could retire at age 62 years and three months with a mean replacement rate of 70 percent of their average yearly earnings since 2004. As of 2006, those born before January 1, 1950, could continue to retire under the old rules, but for those born on or after January 1, 1950, the mean replacement rate was lowered to 64 percent. These younger workers now need to work an additional one year and one month to obtain the 70 percent replacement rate enjoyed by counterparts who may be just a few days, weeks, or months older. We match panel survey data that contain various indicators of well-being with administrative data from the public sector's pension fund and estimate, two and three years after the shock in the pension system, the individual well-being of male workers born in 1949 and 1950. We find strong and persistent effects of the drop in pension rights on the job satisfaction of treated as well as untreated workers. The impact of the shock on the job satisfaction of treated workers is equivalent to having an annual wage that is about twenty-three percent lower. Both the size and persistence of this impact can be fully explained as being the result of social comparison with colleagues who are not affected by the reform as well as with those affected. We find that treated workers suffer more from the reform when they have more untreated colleagues in their organization and income group, while they suffer less when they have more treated colleagues. As can be expected, we find that the social comparison effect is stronger for those who work in sectors that stimulate team work, and less significant for workers who are generally allowed to work part-time. We also find evidence that the major part of the social comparison effect is non-monetary. This can be attributed to feelings of being unfairly treated among those affected by the reform. Moreover, our estimates indicate a negative external effect of the percentage of treated employees on the job satisfaction of each worker in the organization. This is the opposite of what social comparisons would imply and may hint at a negative effect of treated frustrated employees on the general atmosphere in the organization (Williamson, 1973 and Zárraga and Bonache, 2005).We contribute to the existing literature in three ways. First, our main contribution is to the social comparison literature that, in general, has difficulties to isolate exogenous variation in the income of relevant peer groups (Clark and Oswald, 1996, McBride, 2001, Clark, 2003, Bender, 2004, Ferrer-i-Carbonell, 2005, Luttmer, 2005, Vendrik and Woltjer, 2007, Clark et al., 2008b, Clark et al., 2010 and Layard et al., 2010). Our paper is closest related to the study of Card et al. (2010) in which randomized manipulation of access to information on colleagues’ wages is used to identify the effects of relative income on individual job satisfaction. They found that the information treatment asymmetrically affects workers’ job satisfaction: workers with a salary below the median report a lower job satisfaction, while the satisfaction level of those with an income above the median did not change. Similarly to Card et al. (2010), we analyze social comparisons between colleagues, since, regarding the direction of comparisons, colleagues are generally a frequently cited and important reference group (Mayraz et al., 2009, Clark and Senik, 2010 and Goerke and Pannenberg, 2013). However, instead of using exogenous manipulation of information on differences in salaries, the main advantage of our research design is that the shock in the pension system exogenously generates variation in the average income in a reference group of workers as it affects only a specific subgroup of workers. The limited age difference between the treatment and control groups in our sample and the simple and transparent birth-year criterion determining entitlement to the old or new pension rights further guarantee the internal validity of our regression discontinuity design. Second, we also contribute to the literature that has empirically analyzed the relation between retirement and well-being by shedding more light on the causal effects of an exogenous change in retirement expectations on job satisfaction, and by showing the effects of social comparison between workers with different pension rights on job satisfaction. Recent studies used panel data analysis to trace the effects of retirement transitions on well-being over time (e.g., Kim and Moen, 2002, Dave et al., 2006 and Börsch-Supan and Jürges, 2006). However, these panel studies could not fully account for spurious correlations and reverse causality between retirement and well-being over time (e.g., due to negative health shocks). An exception is the study of Charles (2004), who controlled for this by instrumenting retirement on the basis of discontinuous age-specific retirement incentives in the US social security system and changes in laws affecting mandatory retirement and social security benefits. The author found compelling evidence that retirement has a positive causal effect on mental well-being after ascertaining that retirement and well-being are simultaneously determined while failing to control for reverse causality would lead to the false conclusion that retirement has a negative effect on well-being. Our findings of strong effects of changing retirement expectations on well-being are consistent with the Charles finding.2Third, our study does not focus on the actual transition into retirement, as most retirement studies have, but it shows that having to adjust expectations about retirement due to an exogenous shock in the pension system has strongly negative effects on workers’ individual well-being.3 The shock substantially compromises job satisfaction, with the potential result of decreasing effort provision and individual productivity among treated workers.4 Our results are consistent with those of Falba et al. (2008), who examined the impact on mental well-being of deviations of actual retirement dates from preceding expectations and found that mental well-being is negatively affected for those working longer than expected, as well as for those working less long than expected (see Nuttman-Shwartz (2004), Bossé et al. (1987), and Dreyer (1989) for related studies). However, unlike Falba et al. (2008), who analyzed the effects of deviations from retirement expectations on a one-sided measure of well-being (depression),5 this study uses answers to self-assessed questions on job satisfaction and other dimensions of life satisfaction, and documents strong and persistent social comparison and external effects on individual well-being. Since the impact of policies on the well-being or welfare of citizens is an essential concern of economic policy per se and job satisfaction is an important determinant of workplace performance and individual productivity (Jones et al., 2008, Oswald et al., 2009 and Clark et al., 2009), these social comparison effects should be taken into account when modeling the effects of a drop in the generosity of pensions on productive labor supply.6 This study proceeds as follows: Section 2 presents a brief description of the institutional setting of the pension system in the Netherlands and the policy change that was implemented in January 2006. Section 3 describes the data and examines the validity of our natural experiment. The econometric model that we use is explained in Section 4. Section 5 presents the estimation results including an analysis for heterogeneous subsamples. We close with a discussion of our conclusions.

This study used an exogenous shock in pension rights of Dutch public-sector workers to determine the extent to which a drop in the generosity of the pension system affects the well-being of workers nearing retirement. Prior to 2006, public sector workers in the Netherlands could retire at age 62 years and three months with a replacement rate of 70 percent of their average yearly earnings since 2002. As of 2006, those born before January 1, 1950, can continue to retire under the old rules, but for those born on or after January 1, 1950, the replacement rate has been lowered to 64 percent. These younger workers need to work an additional one year and one month to obtain the 70 percent replacement rate enjoyed by their counterparts who may be just a few days, weeks, or months older. We matched panel survey data that contain various indicators of well-being with administrative data of the public sector's pension fund, and estimated the individual well-being scores of male workers born in 1949 or 1950 two and three years after the shock in the pension system. The results provide strong evidence that the shock in the pension system had a substantial and persistent effect on job satisfaction. The drop in job satisfaction is strongly affected by social comparisons with colleagues. Treated workers suffer less from the reform when the treatment group is larger in their organization. Additionally, our estimates indicate a negative external effect of the percentage of treated employees on the job satisfaction of the workers in the organization, which is interpreted as an atmosphere effect. We also found that the major parts of the effects of the pension reform are non-monetary. As expected, these effects are more significant for workers who work in sectors in which teamwork and full-time work hours are more prevalent, and for those who are better informed about their pension rights. To our knowledge, this is the first study to document these strong and persistent social comparison and atmosphere effects on individual well-being of altered expectations about future pension income caused by an exogenous shock in a retirement system. The main advantage of this study is that, unlike previous studies that investigated the relevance of social comparisons for job satisfaction, we exploited unique data on a natural experiment that enabled us to use reference groups exogenously generated by the experiment. The limited age difference between the treatment and control groups in our sample and the simple and transparent birth year criterion determining entitlement to the old or new pension rights ensured that the reference group does not have significantly different characteristics. Furthermore, the experimental character of our study allowed us to shed more light on a causal relation between an exogenous change in retirement expectations and job satisfaction. This study focused on public-sector employees for whom the pension change was more profound than for employees in the private sector of the economy. One can question whether the focus on the public sector restricts the generalizability of our results. Although caution is necessary when generalizing the results, our findings have great relevance for public policy. It should first be noted that the public sector in most European countries is the largest national employer (Pilichowski and Turkisch, 2008). Moreover, most industrialized countries are currently revising their pension systems to extend working life to cope with population aging. These reforms also apply to the retirement schemes of public sector workers (see Palacios and Whitehouse, 2006, for an overview of recent reforms of public sector pension plans in European countries). Since the main objective of social policy is to promote the well-being of the population as a whole, policy makers should consider the negative side effects of the revisions in their pension systems and try to prevent social comparisons. Moreover, recent studies by Jones et al. (2008), Oswald et al. (2009), and Clark et al. (2009) show that well-being is an important determinant of workplace performance and individual productivity. Therefore, it is important that the negative social comparison effects on job satisfaction found in this study are taken into account when modeling the effects of a decrease in the generosity of pensions on productive labor supply.