Should we Subsidize Longevity?

Marie-Louise Leroux, Pierre Pestieau and Gregory Ponthiere

No 2614, CESifo Working Paper Series from CESifo

Abstract: This paper studies the design of the optimal non linear taxation in an economy where longevity varies across agents, and depends on three factors: longevity genes, health investment and farsightedness. Provided earnings, farsightedness and genes are correlated, governmental intervention can be justified on two grounds: correction for a lack of farsightedness and redistribution across both earnings and genetic dimensions. Whether longevity-enhancing spending should be subsidized or taxed is shown to depend on the combined effects of myopia, self-selection and free-riding on the annuity returns. Our policy conclusions depend also on how productivity and genes are correlated, on the complementarity of genes and efforts in the survival function, and on how the government weights the welfare of heterogeneous agents. All in all, it might be desirable to tax longevity-enhancing spending.

Keywords: optimal taxation; longevity; genetic background; heterogeneity; myopia (search for similar items in EconPapers)
JEL-codes: H21 I10 (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Working Paper: Should we subsidize longevity? (2008)
Working Paper: Should we subsidize longevity? (2008)
Working Paper: Should we subsidize longevity? (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_2614

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