Social Insurance against a Short Life: Ante-Mortem versus Post-Mortem Policies

Gregory Ponthiere

No 1342, GLO Discussion Paper Series from Global Labor Organization (GLO)

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 consumption. Whereas each device can yield full insurance, the youth allowance is shown to imply a higher lifetime well-being at the stationary equilibrium. The marginal utility of consumption exceeding the marginal utility of giving when being dead, the youth allowances system is, despite imperfect targeting, a more effi cient mechanism of insurance against the risk of early death.

Keywords: premature death; mortality risk; social insurance; inheritance; lifecycle models (search for similar items in EconPapers)
JEL-codes: E21 H55 I31 J10 J17 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-age, nep-dem, nep-dge, nep-hea, nep-mac, nep-rmg and nep-upt
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https://www.econstor.eu/bitstream/10419/279473/1/GLO-DP-1342.pdf (application/pdf)

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Working Paper: Social insurance against a short life: Ante-Mortem versus post-mortem policies (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:glodps:1342

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