A Dynamic Efficiency Rationale for Public Investment in the Health of the Young
AbstractIn this paper, we assume away standard distributional and static-efficiency arguments for public health, and instead, seek a dynamic efficiency rationale. We study a lifecycle model wherein young agents make health investments to reduce mortality risk. We identify a welfare rationale for public health under dynamic efficiency and exogenous mortalityeven when private and public investments are perfect substitutes. If health investment reduces mortality risk but individuals do not internalize its effect on the life-annuity interest rate, the â€œPhilipson-Becker effectâ€ emerges; when the young are net borrowers, it works together with dynamic efficiency to support a role for public health.
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Bibliographic InfoPaper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 35872.
Date of creation: 05 Feb 2013
Date of revision:
Publication status: Forthcoming in Canadian Journal of Economics
Contact details of provider:
Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
Web page: http://www.econ.iastate.edu
More information through EDIRC
public health; dynamic efficiency; overlapping generations;
Other versions of this item:
- Andersen, Torben M & Bhattacharya, Joydeep, 2012. "A Dynamic Efficiency Rationale for Public Investment in the Health of the Young," Staff General Research Papers 35503, Iowa State University, Department of Economics.
- E2 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-02-16 (All new papers)
- NEP-HEA-2013-02-16 (Health Economics)
- NEP-MAC-2013-02-16 (Macroeconomics)
- NEP-PBE-2013-02-16 (Public Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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