A dynamic efficiency rationale for public investment in the health of the young

Torben M. Andersen and Joydeep Bhattacharya

ISU General Staff Papers from Iowa State University, Department of Economics

Abstract: In this paper, we assume away standard distributional and static-efficiency arguments for public health, and instead, seek a dynamic efficiency rationale. We study a lifecycle model wherein young agents make health investments to reduce mortality risk. We identify a welfare rationale for public health under dynamic efficiency and exogenous mortality even when private and public investments are perfect substitutes. If health investment reduces mortality risk but individuals do not internalize its effect on the life-annuity interest rate, the Philipson-Becker effect emerges; when the young are net borrowers, it works together with dynamic efficiency to support a role for public health.

Date: 2012-09-24
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Related works:
Journal Article: A dynamic-efficiency rationale for public investment in the health of the young (2014)
Journal Article: A dynamic‐efficiency rationale for public investment in the health of the young (2014)
Working Paper: A dynamic-efficiency rationale for public investment in the health of the young (2014)
Working Paper: A Dynamic Efficiency Rationale for Public Investment in the Health of the Young (2013)
Working Paper: A Dynamic Efficiency Rationale for Public Investment in the Health of the Young (2012)
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