Analyzing 30 OECD-countries in 1980-2005, this paper documents the association of an aging electorate with retirement spending. The fi rst result is that an increase in the age of the median voter of one year is associated with an increase of 0.25 percentage points in retirement spending relative to GDP. The second result is that aging does not lead to higher benefi ts per retiree. Both results also hold for health care costs, which are frequently assumed to be positively associated with aging as well. Together, the results contradict the main prediction of median voter models that imply that an older median voter successfully pushes for higher individual benefi ts. If anything, a graying median voter is associated with less generous pensions. These results are reinforced when health care costs are considered with a time trend proxying for technological change. Absent a time trend, health care costs ¿both relative to GDP and per inhabitant¿ are positively infl uenced by the age of the median voter.
|Place of Publication||AIAS|
|Publication status||Published - 2010|