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Social insurance against a short life: Ante-Mortem versus post-mortem policies

Author

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  • Gregory Ponthiere

    (ENS-Rennes, CREM (UMR 6211) and GLO)

Abstract

Welfare States do not insure citizens against the risk of premature death, i.e., the risk of having a short life. Using a dynamic OLG model with risky lifetime, this paper compares two insurance devices reducing well-being volatility due to the risk of early death: (i) an ante-mortem age-based statistical discrimination policy that consists of an allowance given to all young adults (including the unidentified adults who will die early); (ii) a post-mortem subsidy on accidental bequests due to early death. Each policy is financed by taxing old-age income. Whereas each device can yield full insurance, the youth allowance is shown to imply a higher lifetime well-being at the stationary equilibrium. Given that the marginal utility of consumption exceeds the marginal utility of giving when being dead, the youth allowances system is, despite imperfect targeting, a more efficient insurance mechanism against the risk of early death.

Suggested Citation

  • Gregory Ponthiere, 2025. "Social insurance against a short life: Ante-Mortem versus post-mortem policies," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 65(1), pages 255-290, August.
    • Handle: RePEc:spr:sochwe:v:65:y:2025:i:1:d:10.1007_s00355-024-01571-w
    DOI: 10.1007/s00355-024-01571-w
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    More about this item

    JEL classification:

    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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