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 indentify 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 Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne in its series Documents de travail du Centre d'Economie de la Sorbonne with number 09057.
Length: 31 pages
Date of creation: Sep 2009
Date of revision:
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Life expectancy; health expenditures; taxation.;
Other versions of this item:
- DAVILA, Julio & LEROUX, Marie-Louise, 2009. "On the fiscal treatment of life expectancy related choices," CORE Discussion Papers 2009060, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Julio Davila & Marie-Louise Leroux, 2009. "On the fiscal treatment of life expectancy related choices," UniversitÃ© Paris1 PanthÃ©on-Sorbonne (Post-Print and Working Papers) halshs-00423933, HAL.
- 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-2009-10-24 (All new papers)
- NEP-DGE-2009-10-24 (Dynamic General Equilibrium)
- NEP-HEA-2009-10-24 (Health Economics)
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