On the fiscal treatment of life expectancy related choices
In 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.
|Date of creation:||Sep 2009|
|Date of revision:|
|Note:||View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00423933|
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