Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/128436
Authors: 
Danilowicz-Gösele, Kamila
Schwager, Robert
Year of Publication: 
2016
Series/Report no.: 
CESifo Working Paper 5734
Abstract: 
In a model where consumers have quasi-hyperbolic preferences, we compare immediate subsidies paid for health-conscious consumption and future subsidies rewarding good health outcome. We characterize the subsidy rates which implement the unbiased choice. These rates differ because of two countervailing effects: (1) the individual applies quasi-hyperbolic discounting to future subsidy receipts, and (2) she can use the future subsidy to partially correct her own future behavior. We further show that future subsidies result in higher costs for a government which discounts exponentially. However, this result does not necessarily hold if the government itself is formed by time-inconsistent individuals.
Subjects: 
present-bias
quasi-hyperbolic discounting
paternalism
health
JEL: 
H31
D91
I18
Document Type: 
Working Paper

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