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Longevity and welfare in general equilibrium

Laurent Brembilla

Mathematical Social Sciences, 2018, vol. 93, issue C, 22-36

Abstract: Life expectancy is on the rise across the world. This paper analytically studies how it affects welfare in general equilibrium. First, we examine the exogenous impact of a longevity increase on welfare in a canonical Diamond model. We find that a longevity increase does not necessarily increase welfare. Second, we study the impact of a longevity increase on welfare when longevity improvements are costly. We show the existence of economies in which welfare is maximized when longevity is at its minimal level. We provide numerical illustrations of our results. They highlight that the age at which longevity improves and the cost of such improvements are important to determine the welfare impact of a longevity increase.

Date: 2018
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Handle: RePEc:eee:matsoc:v:93:y:2018:i:c:p:22-36