A Public Choice-Theoretic Test of Ricardian Equivalence

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Abstract
Despite significant empirical testing, a definitive conclusion on the Ricardian equivalence hypothesis has not been reached. An alternate empirical test examines whether legislators' votes to raise social security benefits are affected by the age compositions of their constituencies. Legislators should be influenced by the age composition of their constituencies only if the effects of the social security program are not offset by intergenerational transfers from parents to their children. Empincal evidence from 1972, when Congress raised social security benefits by 20%, yields no evidence that legislators were influenced by the share of their state or district population aged 45 (or 65) and above. The Ricardian equivalence hypothesis is not rejected.

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