A dynamic-efficiency rationale for public investment in the health of the young
Journal or Book Title
Canadian Journal of Economics
First Page or Article ID Number
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.
E6, I18, H21
Canadian Economics Association
Andersen, Torben M. and Bhattacharya, Joydeep, "A dynamic-efficiency rationale for public investment in the health of the young" (2014). Economics Publications. 808.