The Role of Stock-Flow Reasoning in Understanding the Social Security Trust Fund

The financial future of Social Security's trust funds is an important policy topic with significant implications for members of the public who pay taxes and expect to receive benefits in retirement. The funds were created to hold and invest surplus tax revenue not used to pay out benefits, but in recent years, Social Security has started to use this money to fulfill benefits obligations. The funds are projected to become depleted in 2035, at which point benefits payments will have to be reduced. In this research, we draw from the literature on stock-flow reasoning errors and inconsistencies to explore how communication about the trust funds impacts understanding of the situation. In Studies 1 and 2 we randomly assign participants to see information about the trust funds over time presented as a stock (i.e., balance) or in terms of flows (i.e., tax revenue and benefits payments), finding that those who see the stock presentation are significantly more likely to expect benefits to go away completely after depletion. In a third study, we show that explicitly prompting participants to reflect on the continuity of the inflows (via payroll taxes) significantly reduces this common misunderstanding even further. Applying the theoretical lens of stock-flow reasoning, results of this research highlight a key aspect of communications about the trust funds that may contribute to – or be used to remedy – the widespread misconception that benefits will cease when the funds are depleted.