Assumed rates of return for public pensions vs. interest rates

 

As a result, Public Penions are 30% under-funded. To figure out why we aren't saving enough for our public pensions, ask three questions

• Who is making the bad decision?
• We the People
• Do We have enuf info to make a good decision?
• No, We the People don't know how to compound, much less discount.
• And the incentive to do so?
• No, We the People over-weight the present, called "hyperbolic discounting," and act as if our discount rates are really big, which means we don't save enough.