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Title:Should we subsidize longevity? PDF Logo
Authors:Leroux, Marie-Louise
Pestieau, Pierre
Ponthiere, Grégory
Issue Date:2009
Series/Report no.:CESifo working paper 2614
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.
Subjects:optimal taxation
longevity
genetic background
heterogeneity
myopia
JEL:H21
I10
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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