PARENTAL INVESTMENTS IN CHILD HEALTH – the importance of paternalistic altruism, child egoism and short-sightedness

Kristian Bolin () and Björn Lindgren
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Kristian Bolin : Department of Economics, School of Business, Economics and Law, Göteborg University, Postal: P.O Box 640, SE 40530 Gothenburg, Sweden, http://www.economics.gu.se
Björn Lindgren: Centre for Health Economics, University of Gothenburg, Gothenburg, Sweden 3 Department of Health Sciences, Lund University, Lund, Sweden 4 National Bureau of Economic Research (NBER), Cambridge MA, United States

No 640, Working Papers in Economics from University of Gothenburg, Department of Economics

Abstract: Parent and child interaction is an important determinant of child health. Typically, parents are more forward-looking than their children and, hence, care about investments in human capital to a larger extent. In this paper we consider the parent-child health-related interaction, when the parent is altruistic and forward-looking and the child is egoistic and short-sighted. The child receives a monetary transfer, from the parent, which is used to finance either health-unrelated consumption or unhealthy behaviour. We apply a simple differential-game approach, assuming linear-state preferences, and study equilibrium time-paths of (a) the parental transfer, (b) the unhealthy behaviour, and (c) the stock of child health capital. We distinguish between the case in which the child is perfectly myopic and the case in which he or she is forward looking.

Keywords: Health capital; parent-child interaction; myopic behaviour; differential game (search for similar items in EconPapers)
JEL-codes: I12 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2015-12
New Economics Papers: this item is included in nep-hea
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