Document Type

Working Paper

Publication Date


Working Paper Number

WP #12018, September 2012


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.

Publication Status

Published as "A dynamic-efficiency rationale for public investment in the health of the young" in Canadian Journal of Economics, Vol. 47 no. 3 (August 2014): 697-719.

JEL Classification

E21, H3, I18

File Format



22 pages

File Function

Revised version: September 24, 2012

Included in

Economics Commons