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

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  • Leroux, M.-L.
  • Pestieau, P.
  • Ponthiere, G.

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.

Suggested Citation

  • Leroux, M.-L. & Pestieau, P. & Ponthiere, G., 2011. "Longevity, genes and efforts: An optimal taxation approach to prevention," Journal of Health Economics, Elsevier, vol. 30(1), pages 62-76, January.
  • Handle: RePEc:eee:jhecon:v:30:y:2011:i:1:p:62-76
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    Cited by:

    1. Delprat, G. & Leroux, M.-L. & Michaud, P.-C., 2016. "Evidence on individual preferences for longevity risk," Journal of Pension Economics and Finance, Cambridge University Press, vol. 15(02), pages 160-179, April.
    2. Onder,Harun & Pestieau,Pierre, 2016. "Inherited wealth and demographic aging," Policy Research Working Paper Series 7739, The World Bank.
    3. Harun Onder & Pierre Pestieau, 2016. "Aging and the Inherited Wealth of Nations," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 14(1), pages 30-36, May.
    4. Pierre Pestieau & Gregory Ponthiere, 2012. "The Public Economics of Increasing Longevity," Hacienda Pública Española, IEF, pages 41-74.
    5. Javier Olivera, 2013. "Old-age Support and Demographic Transition in Developing Countries. A Cultural Transmission Model," Working Papers 201307, Geary Institute, University College Dublin.
    6. Pierre Pestieau & Grégory Ponthiere, 2012. "On the Policy Implications of Changing Longevity," CESifo Working Paper Series 3926, CESifo Group Munich.
    7. Harun Onder & Pierre Pestieau, 2016. "Aging and the Inherited Wealth of Nations," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 14(1), pages 30-36, 05.

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