Endogenous differential mortality, non monitored effort and optimal non linear taxation

Marie-Louise Leroux

No 2008029, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: This paper studies the normative problem of redistribution among individuals who can influence their longevity through a non-monetary effort but have different taste for effort. As benchmarks, we first present the laissez-faire and the first best. In the first best, the level of effort is always lower than in the laissez-faire as the social planner takes into account the consequences of higher survival on the budget constraint. However, since we suppose that effort is private and non-monetary (like exercising), it is reasonable to think that the social planner has no control over it. Thus, we modify our framework and assume for the rest of the paper that effort is determined by the individual while the social planner only allocates consumptions. Under full information with non monitored effort, early consumption is preferred to future consumption and the high-survival individual obtains higher future consumption. Under asymmetric information, the distortion is identical for the low-survival individual while the direction of the distortion for the high-survival individual is ambiguous. We finally show how to decentralize these allocations through a perfect annuity market and (positive or negative) taxes on annuities.

Keywords: annuities; effort; differential mortality; non linear taxation. (search for similar items in EconPapers)
JEL-codes: H21 H23 H55 I12 (search for similar items in EconPapers)
Date: 2008-05-01
References: Add references at CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
https://sites.uclouvain.be/core/publications/coredp/coredp2008.html (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2008029

Access Statistics for this paper

More papers in LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) Voie du Roman Pays 34, 1348 Louvain-la-Neuve (Belgium). Contact information at EDIRC.
Bibliographic data for series maintained by Alain GILLIS ().