Countries around the world are faced with rising costs of old age security programs. In many countries, such as the United States, disability expenditures have been rising even faster than old age expenditures.  The experience of Chile suggests that these costs can be contained in the long run by prefunding, by private participation in the assessment procedure and, possibly, by processes that mimic private participation.  Further research is needed to determine whether more accurate evaluations are made by this approach and whether Chile has chosen the right balance between benefits and costs.  In the meantime, countries that already consider their costs excessive should seriously consider how these economies and incentives can be incorporated into their systems.

NOTE: Nothing written here should be construed as necessarily reflecting the views of the National Center for Policy Analysis or as an attempt to aid or hinder the passage of any bill before Congress.