The critique’s analysis doesn’t take into account the specifics of the U.S. economy – prefer the detailed governmental discussion of the plan.

Periodic fluctuations in the trustees’ estimates of Social Security’s fi- nances are only to be expected, but a systematic and significant under- statement of the program’s financial problems would be much more serious. Unfortunately, the latter appears to be true. The trustees appear to base their conclusions on relatively crude estimation methods— ones that do not take into account important structural features of U.S. demo- graphics, key characteristics of Americans’ economic choices, and inter- relationships between those two elements. Although the trustees’ annual reports contain extensive information on a large number of demographic and economic factors that affect the program’s finances, it is very difficult for outside observers to appreciate the factors— even key ones—that may be missing from the trustees’ estimation methods and procedures. This book’s considerably more detailed, careful, and independent evaluation of the program’s finances shows that Social Security’s financial problems are much bigger than officially acknowledged.

Information about precisely how and why the trustees’ analysis and projections of Social Security’s finances may be inadequate can be ob- tained only through a detailed analysis of all the relevant demographic and economic elements, including their joint evolution in the past and their likely progression through the future. Such an analysis must begin by systematically developing a framework for analyzing and projecting the program’s operations from basic building blocks. Fortunately, those building blocks are publicly available in the form of microdata on U.S. demographic and economic features and organization, Americans’ behav- ior patterns, and detailed rules about how Social Security’s revenues and benefits are determined.

This book undertakes such an analysis of Social Security by construct- ing a microsimulation of U.S. demographic and economic features. Micro- simulations are useful for understanding how all of those features would interact with each other and evolve over time to determine future charac- teristics of the U.S. population and economy within which Social Security will operate. The microsimulation developed here is called Demographic and Economic Microsimulation or DEMSIM. Although several other mi- crosimulations have been constructed and are regularly used for evaluat- ing various aspects of Social Security’s operations, the only evaluations of Social Security’s long-term financial condition and of proposals to reform that program are those conducted by government agencies. No private- sector agencies apparently believe it is feasible or desirable to indepen- dently check whether those projections adopt the correct methodology and provide reasonable estimates.