> I'm inclined to agree, but I do wonder how we avoid people just adjusting their risk threshold to account for the welfare state.
Which direction are you picturing this going?
I would be a lot more flexible in what jobs I would take, what things I would consider doing with my life (starting my own company, taking time off and pursuing some sort of artistic side project...) if I had a good health care safety net.
So that adjustment to my risk tolerance would be good if you're pro-entrepreneurship or pro-arts, but bad if you're pro-giant-faceless-companies-that-can-treat-employees-like-crap.
I was specifically concerned that people would take unproductive risks. Worse business investments, having children outside of an unstable family situation more often, etc. But your point is a good one; my concern could be unfounded and maybe people would be more productive? I genuinely don't know. One question I would have about your model is how it stacks up against countries with strong social safety nets? Do they tend to be more entrepreneurial as your model predicts? If not, why not?
Note that while by certain measures, those countries tend to be less productive than the US, I don't necessarily think that comes down to welfare, and in either case I don't think it's an awful thing to be somewhat less productive. I would personally like to work less.
Which direction are you picturing this going?
I would be a lot more flexible in what jobs I would take, what things I would consider doing with my life (starting my own company, taking time off and pursuing some sort of artistic side project...) if I had a good health care safety net.
So that adjustment to my risk tolerance would be good if you're pro-entrepreneurship or pro-arts, but bad if you're pro-giant-faceless-companies-that-can-treat-employees-like-crap.