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Should we Subsidize Longevity?

Author

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  • Marie-Louise Leroux
  • Pierre Pestieau
  • Grégory Ponthiere

Abstract

This paper studies the design of the optimal non linear taxation in an economy where longevity varies across agents, and depends on three factors: longevity genes, health investment and farsightedness. Provided earnings, farsightedness and genes are correlated, governmental intervention can be justified on two grounds: correction for a lack of farsightedness and redistribution across both earnings and genetic dimensions. Whether longevity-enhancing spending should be subsidized or taxed is shown to depend on the combined effects of myopia, self-selection and free-riding on the annuity returns. Our policy conclusions depend also on how productivity and genes are correlated, on the complementarity of genes and efforts in the survival function, and on how the government weights the welfare of heterogeneous agents. All in all, it might be desirable to tax longevity-enhancing spending.

Suggested Citation

  • Marie-Louise Leroux & Pierre Pestieau & Grégory Ponthiere, 2009. "Should we Subsidize Longevity?," CESifo Working Paper Series 2614, CESifo.
    • Handle: RePEc:ces:ceswps:_2614
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    References listed on IDEAS

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    5. LEROUX, Marie-Louise & PONTHIERE, Grégory, 2008. "Optimal tax policy and expected longevity: a mean and variance approach," LIDAM Discussion Papers CORE 2008039, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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    9. Pierre-André Jouvet & Pierre Pestieau & Gregory Ponthiere, 2010. "Longevity and environmental quality in an OLG model," Journal of Economics, Springer, vol. 100(3), pages 191-216, July.
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    Cited by:

    1. Gregory Ponthiere, 2010. "Unequal Longevities and Lifestyles Transmission," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 12(1), pages 93-126, February.
    2. Leroux, Marie-Louise & Ponthiere, Gregory, 2013. "Utilitarianism and unequal longevities: A remedy?," Economic Modelling, Elsevier, vol. 30(C), pages 888-899.
    3. LEROUX, Marie - Louise & PONTHIERE, Grégory, 2009. "Wives, husbands and wheelchairs : Optimal tax policy under gender-specific health," LIDAM Discussion Papers CORE 2009071, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    4. Julio Davila & Marie-Louise Leroux, 2009. "On the fiscal treatment of life expectancy related choices," Post-Print halshs-00423933, HAL.

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    More about this item

    Keywords

    optimal taxation; longevity; genetic background; heterogeneity; myopia;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • I10 - Health, Education, and Welfare - - Health - - - General

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