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8) For the optimal design of social insurance programs, which of the following statements are NOT right or NOT relevant? A) For temporary income shocks
8) For the optimal design of social insurance programs, which of the following statements are NOT right or NOT relevant? A) For temporary income shocks like that related to covid-19, the government does not need to intervene for most Chinese households because they usually have enough savings to address such income shocks. However, for shocks leading to long-term income loss such as accidentes related to work, the government should provide generous insurance. B) We need to strengthen the enforcement ( E# ) of payroll fees because individuals have strong incentives to evade or avoid the payroll fees. C) The insurance benefit should not be means-tested on changeable means, such as earnings and savings, because of the moral hazard problem. We can rely on characteristics that are hard to change, and relate to the bad shock or low ability, such as age, disability, health shock, and retirement. D) We should impose ceiling for the benefit as the marginal benefit of insurance benefit declines as benefit increases, and eventually lowers than the marginal cost. E) We should measure the extent of crowding-out of social insurance and provide less insurance when the crowding-out is serious
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