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Fed/GFLEC Financial Literacy Seminar Series

December 3, 2020

1:30 PM - 2:30 PM ET

Seminar V: Social Security and Trends in Inequality

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Natasha Sarin

Assistant Professor, University of Pennsylvania Law School and Wharton School of Business



Bio: Natasha Sarin

Natasha Sarin’s interests in law teaching and scholarship are at the intersection of law and finance. Her current research focuses on financial regulation, with papers on both consumer finance and macroprudential risk management. Her work engages with contemporary policy debates and seeks to understand how best to regulate large financial institutions. Sarin is at the frontier of empirical law and economics, using novel datasets to address these important policy questions. Her work has received both academic and popular press attention, and has been covered by various media outlets, including the Washington Post, the Economist, and the Financial Times.

Prior to joining the faculty at Penn, Sarin earned a JD from Harvard Law School. She will receive a PhD in Economics from Harvard University in May 2019. She also received a BA in Ethics, Politics, and Economics from Yale University.


Recent influential work finds large increases in inequality in the U.S. based on measures of wealth concentration that notably exclude the value of social insurance programs. This paper revisits this conclusion by incorporating Social Security retirement benefits into measures of wealth inequality. We find that top wealth shares have not increased in the last three decades when Social Security is properly accounted for. When discounted at the risk-free rate, real Social Security wealth increased substantially from $4.8 trillion in 1989 to $40.9 trillion in 2016. When we adjust for systematic risk coming from the covariance of Social Security returns with the market portfolio, this increase remains sizable, growing from over $4.0 trillion in 1989 to $33.8 trillion in 2016. Consequently, by 2016, Social Security wealth represented 57% of the wealth of the bottom 90% of the wealth distribution. We conclude that progressive programs like Social Security represent the main source of savings for most Americans. Measures of inequality that exclude them are misleading.