Cost Benefit Analysis
Number of words: 1679
Cost-benefit analysis refers to the technique of drawing comparisons between the estimated costs and the benefits linked to a specific project. From this, a project decision would be made to establish whether it is effective or not. The problem of poverty amongst senior citizens in Union County, New Jersey, would be examined, and cost-benefit analysis done. In addition, alternatives to address the problem would be evaluated, and a cost-benefit analysis is done to compare the alternatives.
Alternatives to addressing the problem of poverty and their cost-benefit analysis based on microeconomic or macroeconomic models
The alternative of Social Security for the senior citizens in Union County
Social security refers to the process of creating a pool of resources from the working populations and paying out the benefits to the senior citizens eligible for it. Union County in New Jersey has been able to leverage using social security to enhance the plan for the retirement of former civil servants and families whose breadwinner dies. According to the U.S. Census Bureau, the senior population makes up 15% (1.292 million people) of the total population and is 65 years or older in New Jersey (Census Bureau, 2019). In addition, the problem of poverty for the senior citizens in Union County, New Jersey, would be addressed through social security. This is because social security would have a significant role in reducing poverty levels among senior citizens (Union County, 2021).
Regarding the cost-benefit analysis of social security, it would lead to assured, consistent benefits that keep up with the rising costs of living impacting the senior citizens of Union County, New Jersey. It is significant to note that this would be the first benefit. Social security is economically viable in that it has the capacity and potential to keep up with inflation. From this, the senior citizens of Union County, New Jersey, would be shielded against poverty as they age. Social security also provides a platform for private pensions and individual savings. Social security would provide a higher payout to the senior citizens of Union County as there would be no economic leakages leading to loss of funds. In short, it is proof of economic leakages, thus effectively cushioning the senior citizens.
On top of this, the administrative costs meant to maintain and sustain social security are so minimal. Social security is also economically modest. For example, a retired senior citizen of Union County would benefit from 40% of replacement of previous earnings. Considering all these, it is easier to note that without social security, most senior citizens in Union County would be living below the poverty line. On the other hand, there would be costs associated with utilizing the alternative of social security to address poverty amongst the Senior citizens of Union County in New Jersey.
The redistributive impacts of social security would lead to the senior citizens of Union County receiving benefits that may not be desirable. In this perspective, the individuals who would be lucky to live for long would be the only ones to enjoy social security. In short, it generates economic disparities in its distribution among the poor and the wealthy, thus not economically feasible. It would reduce the savings of a country, thus negatively impacting the gross domestic product of the United States of America (Anderson et al., 2019). After evaluating the cost-benefit analysis of social security, it can be pointed that the benefits far outweigh the costs in the long run, thus an effective and efficient alternative. The state of New Jersey and Union County would be viewed as supportive in bringing solutions to the problems affecting its senior citizens through social security. From the cost-benefit analysis, it can be noted that social security can serve the needs of diverse groups within the Union County community.
Pensions as an alternative for the senior citizens in Union County
Pensions refer to the regular payments made by a federal or local government to the senior citizens past retirement age. In addition, it would cover widows and people living with a disability. In this scenario, a pool of financial resources would be pooled together and invested on behalf of an employee, thus generating income upon retirement. The pension was selected as another alternative to addressing the problem of poverty amongst senior citizens of Union County, New Jersey. It is significant to note that the state of New Jersey has robust pension systems aimed at benefiting its senior citizens.
Regarding the benefits that would accrue from using this alternative, it would allow the senior citizens of Union County to enjoy generous pension benefits after working in companies for many years upon retirement. According to the U.S. Department of labor, pension plans of retirees would be determined in advance before retiring. The senior citizens would benefit from creating their private pension schemes. For example, in the state of New Jersey, state workers would contribute to New Jersey’s Division of Pensions and Benefits.
The senior citizens would access diverse pension funds, thus enabling them to choose the best ones. In the long run, their old age would be characterized by quality life as covered by the pension scheme. When receiving their pensions, the senior citizens of Union County would be exempted from income tax, thus boosting its economic viability. Using the net present value as a macroeconomic model for determining the cost-benefit analysis of pensions would be ideal. Here, the senior citizen of Union County would estimate the possible amount of accumulated benefits throughout their working period as workers of the state government.
Concerning costs, the senior citizens of Union County would not have control over their pensions invested. It has high chances of experiencing shocks, especially during an economic recession or inflation, and this means that the net present value of the initial investment would drop drastically, thus limiting its economic feasibility and viability. In a nutshell, pensions would place the burden of retirement saving on the worker. From this, there would be the increased vulnerability of a senior citizen of Union County to poverty. This would limit their access to quality healthcare, food, shelter, and other vital aspects of old age. Despite pensions becoming obsolete in the last decade, many Americans continue to use them. Pensions have proven to benefit other groups of the population, for example, the children and wives of the senior citizens through public trusts where the next of kin would enjoy the benefits. The critical aspect of ethics in pensions has raised a heated debate in the United States of America and, to be specific, Union County in the state of New Jersey. Others argue that pensions are often prone to misuse of the resources pooled together by the employees. This is unique evidence of why pensions are no longer as popular today as they used to be in the past (Kamath & Patil, 2017).
The alternative of status quo
The status quo would mean that the current state of senior citizens in Union County would remain the same. In addition, this would mean that there would be no need to come up with other sufficient alternatives for tackling the challenge of poverty among the senior citizens of Union County in the state of New Jersey. Why would this be so? It is essential to note that New Jersey is home to the increasing and diverse senior and older population. The Division of Aging Services has been using the allocated funds to distribute it to various counties like Union County to alleviate the poverty of senior citizens. The current state of senior citizens in Union County has its benefits. First, Medicare premiums have been enhanced where senior citizens of Union County would save and not incur health costs when they get sick. The current Area Agencies on Aging in Union County have efficiently aided in providing assistance, hospice, adult care, education, caregiver support, and transport services to senior citizens. In addition, this would mean that the status quo as an alternative to pensions and social security is effective and efficient. In addition, the current interventions in Union County have had a trickle-down effect on children, women, and persons with disabilities, as they would also benefit from such initiatives (Abishek, 2021). Concerning the macroeconomic model, the status quo alternative would be prone to inflation, leading to a shortage of funds aimed at fighting poverty among the senior citizens of Union County. The state of New Jersey might cut on revenue allocation meant for aging services. This makes it economically unviable. Responsibility and professionalism are two critical ethical issues that would be drawn from the status quo alternative.
To sum up, pensions, social security, and the status quo alternatives would continue to be used as techniques to address the problem of poverty among the senior citizens of Union County, New Jersey, and the entire nation. From these three alternatives, it is evident that both benefits and costs exist that come with them as per the cost-benefit analysis. In addition, macroeconomic elements, for example, inflation, would continue having huge impacts on these alternatives. Lastly, there would be a need for more studies on undertaking a cost-benefit analysis to determine the most viable, feasible, and feasible alternatives.
Abhishek. (2021). Department of human services | Aging services. The Official Web Site for The State of New Jersey. https://www.nj.gov/humanservices/clients/aging/index.html
Anderson, C. A., Schlegelmilch, A., & Hartman, E. (2019). Wisconsin PROMISE cost-benefit analysis and sustainability framework. Journal of Vocational Rehabilitation, 51(2), 253-261.
Census Bureau. (2019). U.S. Census Bureau QuickFacts: New Jersey. Census Bureau QuickFacts. https://www.census.gov/quickfacts/NJ
Kamath, D. V., & Patil, D. R. (2017). Cost Benefit Analysis of National Pension Scheme. International Journal of Management, 8(3).
Union County. (2021). Social Security. County of Union, New Jersey – We’re connected to you. https://ucnj.org/departments/human-services/opdsn/social-security/