Generational accounting is a relatively new method of national accounting for measuring redistribution of lifetime tax burdens across generations from social insurance

Social insurance

Social insurance is any government-sponsored program with the following four characteristics:* the benefits, eligibility requirements and other aspects of the program are defined by statute;...

, including social security

Social security

Social security is primarily a social insurance program providing social protection or protection against socially recognized conditions, including poverty, old age, disability, unemployment and others. Social security may refer to:...

 and social health insurance. It has been proposed as a better guide to the sustainability of a fiscal policy

Fiscal policy

In economics and political science, fiscal policy is the use of government expenditure and revenue collection to influence the economy....

 than budget deficits, which reflect only taxes minus spending in the current year.

Generational accounting goes beyond conventional government budget measures, such the national debt and budget deficits, by accounting for projected lifetime taxes per capita net of transfers

Transfer payment

In economics, a transfer payment is a redistribution of income in the market system. These payments are considered to be exhaustive because they do not directly absorb resources or create output...

, which are not measured in a pay-as-you-go system of social-insurance accounting. The latter includes only current taxes for retirees less current outlays. Uses include projecting future taxes and outlays from different prospective current policies. For example, if a fall in labor-force growth from an earlier fall in the birth rate is projected to increase the proportion of retirees to the labor force

Labor force

In economics, a labor force or labour force is a region's combined civilian workforce, including both the employed and unemployed.Normally, the labor force of a country consists of everyone of working age In economics, a labor force or labour force is a region's combined civilian workforce,...

, generational accounting might examine different projected changes in taxes or program benefits to finance the change.

A refutation of generational accounting was put forth to the Federal Accounting Standards Advisory Board (FASAB) in 2009.

See also

• Dependency ratio
  Dependency ratio
  In economics and geography the dependency ratio is an age-population ratio of those typically not in the labor force and those typically in the labor force...
  
  
• Distribution (economics)
  Distribution (economics)
  Distribution in economics refers to the way total output, income, or wealth is distributed among individuals or among the factors of production .. In general theory and the national income and product accounts, each unit of output corresponds to a unit of income...
  
  

• Demographic economics
  Demographic economics
  Demographic economics or population economics is the application of economics to demography, the study of human populations, including size, growth, density, distribution, and vital statistics.Analysis includes economic determinants and consequences of:...
  
  
• Pensions crisis
  Pensions crisis
  The pensions crisis is a predicted difficulty in paying for corporate, state and federal pensions in the U.S. and Europe, due to a difference between pension obligations and the resources set aside to fund them. Shifting demographics are causing a lower ratio of workers per retiree, while retirees...
  
  

• Social welfare provision
• Wealth (economics)

Further reading

• Laurence J. Kotlikoff, 1987. "Social security," The New Palgrave: A Dictionary of Economics, v. 4, pp. 418–20.
• ____, 1992. Generational Accounting: Knowing Who Pays, and When, for What We Spend, The Free Press. Review extract.
• Alan J. Auerbach, Jagadeesh Gokhale and Laurence J. Kotlikoff, 1994. "Generational Accounting: A Meaningful Way to Evaluate Fiscal Policy ," Journal of Economic Perspectives, 8(1) , pp. 73–94.
• Robert Haveman, 1994. "Should Generational Accounts Replace Public Budgets and Deficits?" Journal of Economic Perspectives, 8(1), ppp. 95–111.
• John Sturrock, 1995. Who Pays and When? An Assessment of Generational Accountinghttp. U.S. Congressional Budget Office. Preface, contents, & links by chapter.
• Peter Diamond
  Peter A. Diamond
  Peter Arthur Diamond is an American economist known for his analysis of U.S. Social Security policy and his work as an advisor to the Advisory Council on Social Security in the late 1980s and 1990s. He was awarded the Nobel Memorial Prize in Economic Sciences in 2010, along with Dale T. Mortensen...
  
  , 1996. "Generational Accounting and Generational Balance: An Assessment," National Tax Journal, 49(4), pp. 597–607 (press +).
• Laurence J. Kotlikoff, 1997. "Reply to Diamond's and Cutler's Reviews of Generational Accounting, National Tax Journal, 52(2). pp. 303-14.
• Willem H. Buiter
  Willem Buiter
  Willem Hendrik Buiter Willem Hendrik Buiter Willem Hendrik Buiter (born September 26, 1949]] was a member of the Bank of England's Monetary Policy Committee from June 1997-May 2000. He joined the London School of Economics as a chair in the European Institute in September 2005....
  
  , 1997. "Generational Accounts, Aggregate Saving and Intergenerational Distribution," Economica, N.S., 64(256) , ppp. 605–626.
• Laurence J. Kotlikoff and Bernd Raffelhüschen, 1999. "Generational Accounting around the Globe," American Economic Review, 89(2), pp. 161–166.
• Alan J. Auerbach, Laurence J. Kotlikoff, and Willi Leibfritz, 1999. Generational Accounting Around the World. 534 pp. Preview.
• Rowena A. Pecchenino1 & Kelvin R. Utendorf, 1999. "Social Security, Social Welfare and the Aging Population," Journal of Population Economics, 12(4), pp. 607–623. Abstract.
• Holger Bonin, 2001. Generational Accounting: Theory and Application. Springer. Preview.
• World Bank
  World Bank
  The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
  
  , 2001. "Generational Accounting." as lecture outline. Simple as ABC.
• Laurence J. Kotlikoff and Scott Burns
  Scott Burns (newspaper columnist)
  Scott Burns is a newspaper columnist and author who has covered personal finance and investments for over 30 years. Today, he ranks as one of the five most widely read personal finance writers in the country, according to The Dallas Morning News...
  
  , 2005. The Coming Generational Storm: What You Need to Know about America's Economic Future. MIT Press. Description and chapter-preview links, p. vii.
• Jagadeesh Gokhale & Kent A. Smetters, 2006. "Fiscal and Generational Imbalances: An Update" in James M. Poterba
  James M. Poterba
  James Michael "Jim" Poterba is an American economist, Mitsui Professor of Economics at the Massachusetts Institute of Technology, and current NBER president and chief executive officer.- Early years :...
  
  , ed., Tax Policy and the Economy, v. 20, ch. 6, pp. 193–223. MIT Press.
• Rudy Penner, 2007. "Taxes and the Budget: What is Generational Accounting?" in The Tax Policy Briefing Book: A Citizens' Guide for the 2008 Election and Beyond. Tax Policy Center.
• U.S. Government Accountability Office. 2008 Financial Report of the United States Government, p. 40, Note 23, with estimated present value of future expenditures in excess of future revenue. Chapter links.
• John B. Shoven
  John Shoven
  John B. Shoven is the Wallace R. Hawley Director of the Stanford Institute for Economic Policy Research, the Charles R. Schwab Professor of Economics at Stanford University, the Buzz and Barbara McCoy Senior Fellow at the Hoover Institution and a research associate of the National Bureau of...
  
  , ed., 2011. Demography and the Economy, University of Chicago Press. Scroll-down description and preview, ch. 4-6 & 8.