The Golden Rule of Longevity

Gylfi Zoega and Gylfi Zoega
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Gylfi Zoega: Aarhus Universitet
Gylfi Zoega: University of Iceland
Authors registered in the RePEc Author Service: Gylfi Zoega

No 1705, Birkbeck Working Papers in Economics and Finance from Birkbeck, Department of Economics, Mathematics & Statistics

Abstract: How much should society invest in medical care that extends the lives of the older generations? We derive a golden rule for the level of health care expenditures and find that the optimal level of life-extending health care expenditures should increase with rising productivity, increase with the retirement age, and also increase with the population growth rate if a higher growth rate lowers the ratio of retirees to working-age people sufficiently, while the effects of an improvement in medical technology are ambiguous. Moreover, we find that a market economy may be inefficient in terms of the provision of life-extending health care because an individual ignores the effect of his own longevity on the income of others.

Keywords: Health care expenditures; golden rule; productivity. (search for similar items in EconPapers)
JEL-codes: E2 E6 I1 (search for similar items in EconPapers)
Date: 2017-10
New Economics Papers: this item is included in nep-age, nep-hea and nep-mac
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https://eprints.bbk.ac.uk/id/eprint/26862 First version, 2017 (application/pdf)

Related works:
Journal Article: THE GOLDEN RULE OF LONGEVITY (2019)
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