Why does the United States and every other developed nation have a system of social-insurance pensions? The simple answer is that social insurance is intended to ensure basic income to those no longer able to work. These include the elderly, the disabled, orphans, and widows and widowers with small children. “Ensure” means that incomes must be available reliably; “basic” means that government's obligation is limited. That is why social-insurance pensions typically replace a larger fraction of earnings of those at the bottom of the wage ladder than those at the top. Social Security beneﬁts also rise as average earnings increase.