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.
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.
E21, H3, I18
Revised version: September 24, 2012
Andersen, Torben M. and Bhattacharya, Joydeep, "A dynamic efficiency rationale for public investment in the health of the young" (2012). Economics Working Papers (2002–2016). 84.