Social insurance against a short life: Ante-Mortem versus post-mortem policies

Gregory Ponthiere

Social Choice and Welfare, 2025, vol. 65, issue 1, No 9, 255-290

Abstract: Abstract Welfare States do not insure citizens against the risk of premature death, i.e., the risk of having a short life. Using a dynamic OLG model with risky lifetime, this paper compares two insurance devices reducing well-being volatility due to the risk of early death: (i) an ante-mortem age-based statistical discrimination policy that consists of an allowance given to all young adults (including the unidentified adults who will die early); (ii) a post-mortem subsidy on accidental bequests due to early death. Each policy is financed by taxing old-age income. Whereas each device can yield full insurance, the youth allowance is shown to imply a higher lifetime well-being at the stationary equilibrium. Given that the marginal utility of consumption exceeds the marginal utility of giving when being dead, the youth allowances system is, despite imperfect targeting, a more efficient insurance mechanism against the risk of early death.

JEL-codes: E21 H55 I31 J10 J17 (search for similar items in EconPapers)
Date: 2025
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Working Paper: Social insurance against a short life: Ante-Mortem versus post-mortem policies (2024)
Working Paper: Social Insurance against a Short Life: Ante-Mortem versus Post-Mortem Policies (2023)
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DOI: 10.1007/s00355-024-01571-w

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