Longevity, genes and efforts: An optimal taxation approach to prevention

Journal article: This paper applies the analytical tools of optimal taxation theory to the design of the optimal subsidy on preventive behaviours, in an economy where longevity varies across agents, and depends on preventive expenditures and on longevity genes. Public intervention can be here justified on three grounds: corrections for misperceptions of the survival process and for externalities related to individual preventive behaviour, and redistribution across both earnings and genetic dimensions. The optimal subsidy on preventive expenditures is shown to depend on the combined impacts of misperception, externalities and self-selection. It is generally optimal to subsidize preventive efforts to an extent depending on the degree of individual myopia, on how productivity and genes are correlated, and on the complementarity of genes and preventive efforts in the survival function.

Author(s)

Marie-Louise Leroux, Pierre Pestieau, Grégory Ponthière

Journal
  • Journal of Health Economics
Date of publication
  • 2011
Keywords JEL
H21 I10
Keywords
  • Genetic background
  • Misperception
  • Optimal taxation
  • Prevention
  • Survival prospects
Pages
  • 62-76
Version
  • 1
Volume
  • 30