On the fiscal treatment of life expectancy related choices
AbstractIn an overlapping generations economy setup we show that, if individuals can improve their life expectancy by exerting some effort, costly in terms of either resources or utility, the competitive equilibrium steady state differs from the ﬁrst best steady state. This is due to the fact that under perfect competition individuals fail to anticipate the impact of their longevity-enhancing effort on the return of their annuitized savings. We identify the policy instruments required to implement the ﬁrst-best into a competitive equilibrium and show that they are speciﬁc to the form, whether utility or resources, that the effort takes.
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Bibliographic InfoPaper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2009060.
Date of creation: 01 Sep 2009
Date of revision:
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life expectancy; health expenditures; taxation;
Other versions of this item:
- Julio Davila & Marie-Louise Leroux, 2009. "On the fiscal treatment of life expectancy related choices," Documents de travail du Centre d'Economie de la Sorbonne 09057, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-03-28 (All new papers)
- NEP-DGE-2010-03-28 (Dynamic General Equilibrium)
- NEP-HEA-2010-03-28 (Health Economics)
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