Title

A dynamic-efficiency rationale for public investment in the health of the young

Campus Units

Economics

Document Type

Article

Publication Version

Submitted Manuscript

Publication Date

8-2014

Journal or Book Title

Canadian Journal of Economics

Volume

47

Issue

3

First Page or Article ID Number

697

Last Page

719

DOI

10.1111/caje.12095

Abstract

In this paper, we assume away standard distributional and static-efficiency arguments for public health, and instead, seek a dynamic efficiency rationale. We study a lifecycle model wherein young agents make health investments to reduce mortality risk. We identify a welfare rationale for public health under dynamic efficiency and exogenous mortality even when private and public investments are perfect substitutes. If health investment reduces mortality risk but individuals do not internalize its effect on the life-annuity interest rate, the Philipson-Becker effect emerges; when the young are net borrowers, it works together with dynamic efficiency to support a role for public health.

JEL Classification

E6, I18, H21

Comments

This is a working paper of an article published as Andersen, Torben M., and Joydeep Bhattacharya. "A dynamic‐efficiency rationale for public investment in the health of the young." Canadian Journal of Economics/Revue canadienne d'économique 47, no. 3 (2014): 697-719. doi:10.1111/caje.12095. Posted with permission.

Copyright Owner

Canadian Economics Association

Language

en

File Format

application/pdf

Published Version

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