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Longevity, genes and efforts: an optimal taxation approach to prevention

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  • LEROUX, Marie-Louise
  • PESTIEAU, Pierre
  • PONTHIERE, Grégory

Abstract

Abstract This paper applies the analytical tools of optimal taxation theory to the design of the optimal subsidy on preventive behaviours, in an economy where longevity varies across agents, and depends on preventive expenditures and on longevity genes. Public intervention can be here justified on three grounds: corrections for misperceptions of the survival process and for externalities related to individual preventive behaviour, and redistribution across both earnings and genetic dimensions. The optimal subsidy on preventive expenditures is shown to depend on the combined impacts of misperception, externalities and self-selection. It is generally optimal to subsidize preventive efforts to an extent depending on the degree of individual myopia, on how productivity and genes are correlated, and on the complementarity of genes and preventive efforts in the survival function.

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File URL: http://dx.doi.org/10.1016/j.jhealeco.2010.10.003
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Bibliographic Info

Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers RP with number -2309.

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Handle: RePEc:cor:louvrp:-2309

Note: In : Journal of Health Economics, 30, 62-76, 2011
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  1. Antoine Bommier & Marie-Louise Leroux & Jean-Marie Lozachmeur, 2010. "On the Public Economics of Annuities with Differential Mortality," CER-ETH Economics working paper series 10/135, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
  2. JOUVET, Pierre-André & PESTIEAU, Pierre & PONTHIERE, Gregory, 2007. "Longevity and environmental quality in an OLG model," CORE Discussion Papers 2007069, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Alexander Ludwig & Alexander Zimper, 2008. "A parsimonious model of subjective life expectancy," Working Papers 74, Economic Research Southern Africa.
  4. Cervellati, Matteo & Sunde, Uwe, 2005. "Human capital formation, life expectancy, and the process of development," Munich Reprints in Economics 20083, University of Munich, Department of Economics.
  5. Broome, John, 2006. "Weighing Lives," OUP Catalogue, Oxford University Press, number 9780199297702.
  6. David E. Bloom & David Canning & Rick Mansfield & Michael Moore, 2006. "Demographic Change, Social Security Systems, and Savings," NBER Working Papers 12621, National Bureau of Economic Research, Inc.
  7. Cervellati, Matteo & Sunde, Uwe, 2002. "Human Capital Formation, Life Expectancy and the Process of Economic Development," IZA Discussion Papers 585, Institute for the Study of Labor (IZA).
  8. Contoyannis, Paul & Jones, Andrew M., 2004. "Socio-economic status, health and lifestyle," Journal of Health Economics, Elsevier, vol. 23(5), pages 965-995, September.
  9. Balia, Silvia & Jones, Andrew M., 2008. "Mortality, lifestyle and socio-economic status," Journal of Health Economics, Elsevier, vol. 27(1), pages 1-26, January.
  10. Atkinson, A. B. & Stiglitz, J. E., 1976. "The design of tax structure: Direct versus indirect taxation," Journal of Public Economics, Elsevier, vol. 6(1-2), pages 55-75.
  11. Jeffrey R. Brown, 2007. "Rational and Behavioral Perspectives on the Role of Annuities in Retirement Planning," NBER Working Papers 13537, National Bureau of Economic Research, Inc.
  12. Helmuth Cremer & Jean-Marie Lozachmeur & Pierre Pestieau, 2010. "Collective Annuities and Redistribution," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 12(1), pages 23-41, 02.
  13. Jie Zhang & Junsen Zhang & Michael Leung, 2006. "Health investment, saving, and public policy," Canadian Journal of Economics, Canadian Economics Association, vol. 39(1), pages 68-93, February.
  14. Antoine Bommier & Marie-Louise Leroux & Jean-Marie Lozachmeur, 2011. "Differential mortality and social security," Canadian Journal of Economics, Canadian Economics Association, vol. 44(1), pages 273-289, February.
  15. Tomas J. Philipson & Gary S. Becker, 1998. "Old-Age Longevity and Mortality-Contingent Claims," Journal of Political Economy, University of Chicago Press, vol. 106(3), pages 551-573, June.
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Cited by:
  1. Pierre Pestieau & Grégory Ponthiere, 2012. "On the Policy Implications of Changing Longevity," CESifo Working Paper Series 3926, CESifo Group Munich.
  2. PESTIEAU, Pierre & PONTHIERE, Grégory, . "The public economics of increasing longevity," CORE Discussion Papers RP -2464, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Javier Olivera, 2013. "Old-age Support and Demographic Transition in Developing Countries. A Cultural Transmission Model," Working Papers 201307, Geary Institute, University College Dublin.
  4. Delprat, Gaëtan & Leroux, Marie-Louise & Michaud, Pierre-Carl, 2013. "Evidence on Individual Preferences for Longevity Risk," IZA Discussion Papers 7317, Institute for the Study of Labor (IZA).
  5. repec:hal:wpaper:halshs-00676492 is not listed on IDEAS

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