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PARENTAL INVESTMENTS IN CHILD HEALTH – the importance of paternalistic altruism, child egoism and short-sightedness

Author

Listed:
  • Bolin , Kristian

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

  • Lindgren, Björn

    (Centre for Health Economics, University of Gothenburg, Gothenburg, Sweden 3 Department of Health Sciences, Lund University, Lund, Sweden 4 National Bureau of Economic Research (NBER), Cambridge MA, United States)

Abstract

Parent and child interaction is an important determinant of child health. Typically, parents are more forward-looking than their children and, hence, care about investments in human capital to a larger extent. In this paper we consider the parent-child health-related interaction, when the parent is altruistic and forward-looking and the child is egoistic and short-sighted. The child receives a monetary transfer, from the parent, which is used to finance either health-unrelated consumption or unhealthy behaviour. We apply a simple differential-game approach, assuming linear-state preferences, and study equilibrium time-paths of (a) the parental transfer, (b) the unhealthy behaviour, and (c) the stock of child health capital. We distinguish between the case in which the child is perfectly myopic and the case in which he or she is forward looking.

Suggested Citation

  • Bolin , Kristian & Lindgren, Björn, 2015. "PARENTAL INVESTMENTS IN CHILD HEALTH – the importance of paternalistic altruism, child egoism and short-sightedness," Working Papers in Economics 640, University of Gothenburg, Department of Economics.
    • Handle: RePEc:hhs:gunwpe:0640
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    File URL: http://hdl.handle.net/2077/41330
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    References listed on IDEAS

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    More about this item

    Keywords

    Health capital; parent-child interaction; myopic behaviour; differential game;
    All these keywords.

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior

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