The chapter introduces the core arguments of the book: that the welfare state exists not only to relieve poverty (the ‘Robin Hood’ function) but also to provide insurance and consumption smoothing over the life cycle (the ‘piggy‐bank’ function). The latter is the focus of this book, which discusses insurance (unemployment insurance, medical insurance, long‐term care insurance), pensions (i.e. redistribution from one's younger to one's older self) and education finance, notably student loans (i.e. redistribution from one's older to one's younger self). The state has a major role in these areas because private institutions face problems of imperfect information, risk, and uncertainty.
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