17 Dec 2025
Arthur Seibold, newly appointed at LMU, examines social security systems from a behavioral economics perspective. To do this, he works with large administrative datasets.
left LMU with a bachelor’s degree and returned 15 years later as a professor. | © LMU/Stephan Höck
There were more than 1.8 million new applicants for a pension last year in Germany. Why they chose this particular point in their working lives to retire is one of the research questions Arthur Seiboldis investigating. The economist has been Professor of Public Finance and Social Policy at LMU’s Faculty of Economics since March. He has already demonstrated in several studies that the decision to retire does not depend solely on financial factors.
Seibold’s appointment at LMU is a homecoming, as this is where he began his studies and where he earned a bachelor’s degree in economics in 2011. After that, he moved to the London School of Economics, initially for a master’s degree and then staying on to complete his doctorate. “LSE was a great environment where you were surrounded by top researchers. It was in this doctoral program that I discovered my passion for research.” In 2019, he was awarded the German Pension Insurance’s Research Prize for his work entitled Essays on Behavioral Responses to Social Insurance and Taxation. After leaving LSE, Seibold took up an assistant professorship in public finance at the University of Mannheim in 2018, before moving to LMU this year.
To answer his research questions, Arthur Seibold has been working with large volumes of administrative data since his PhD days – such as official data from the German Pension Insurance. “What’s unique about my research is that I examine the behavioral economic factors affecting real-world decisions.” His studies show that when choosing the moment at which to retire, for example, people do not adhere to the standard economic model, according to which they seek only to optimize their financial advantage. Instead, psychological factors play a major role.
In the context of retirement, you can see the importance of behavioral economics. If you tried to simulate the effects of pension reforms based on a standard model, you would underestimate the effectiveness of raising the statutory retirement ages.Arthur Seibold, Professor of Public Finance and Social Policy at LMU’s Faculty of Economics
“In the context of retirement, you can see the importance of behavioral economics. If you tried to simulate the effects of pension reforms based on a standard model, you would underestimate the effectiveness of raising the statutory retirement ages,” says Seibold. This is not only because these age thresholds shift the financial incentives to retire, but: “In the long run, they also shift the norms regarding retirement age. And this second factor ultimately has an even greater impact, which is completely ignored in the standard economic model.”
In studies, Seibold has shown that many people are so strongly guided by the statutory retirement age “that it cannot be explained by financial incentives alone.” Rather, the age threshold is perceived as the ‘normal’ time to retire. By analyzing the data, Seibold also identified peer effects, with people basing their retirement decisions on when colleagues, neighbors, or family members leave the workforce.
Arthur Seibold was awarded the Schmölders Prize by the German Economic Association (Verein für Socialpolitik) in 2023 for his research on this subject.
Specialist journals are not the only place where Seibold publishes the results of his research. He recently published a book called Rethinking Pension Reform, which surveys the latest scholarship on pension reforms. “In my view, it’s vitally important to connect theoretical discussions about how people behave with practically relevant aspects of pension and social policy,” says Seibold.
So the knowledge about the effectiveness of reforms is there – what the LMU economist would like to focus on more in the future is the question of their political feasibility. “This is presumably because pension reforms are unpopular in society. I think it’s important to understand what underlies these negative views. Ultimately, this is an interdisciplinary question involving economics, politics, and psychology.”
In my view, it’s vitally important to connect theoretical discussions about how people behave with practically relevant aspects of pension and social policy.Arthur Seibold, Professor of Public Finance and Social Policy at LMU’s Faculty of Economics
As long as this question remains unresolved, the verdict of experts such as Arthur Seibold on pension reforms will sometimes be more clear-cut than politicians would like. The upcoming reform in Germany to reduce the tax burden on pensioners who continue to work is an example of attempts to use financial incentives to induce people to work for longer. “My research shows that this type of reform does not work at allbecause, contrary to standard economic models, people do not respond very much to financial incentives,” says Seibold. "I expect that this reform, if anything, will have only a marginal effect on behavior. Few people will continue working solely because of the reform. At the same time, it will be expensive for the government because tax breaks will be given to everyone who would have continued working after retirement in any case.”
Happily, Seibold is also able to say how the matter could be handled better based on academic research findings: “In the end, as unpopular as this reform may be, there will be no way around raising the statutory retirement age in order toto achieve significant effects on the employment of older people. If you wanted to distill a key message from empirical research on pension systems over the past 10 or 20 years, it would be that shifting these age thresholds is very effective as a pension reform, whereas financial incentives are much less so.”
Giulia Giupponi, Arthur Seibold: Rethinking Pension Reform. CEPR Press 2024