PONTHIERE Gregory

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"What can economic analysis teach us about the long term, about those times whose duration is such that nothing (or almost nothing) can be treated as a constant - neither the population, nor knowledge, nor economic and political institutions? Is it possible to construct an economic theory of the very long term, without betraying the specificity of the societies that have succeeded one another, and of the relationships that characterize them? This manual provides an introduction to the Unified Growth Theory. Developed over the last 20 years, this theory studies, with the help of refined dynamic models, the existence, over the centuries, of various economic regimes - each regime being characterized by its own "economic laws" - and the transition from one economic regime to another. Three main lessons emerge from this book. The first lies in the definition of the economic regime: what may look like an economic "law" over a period of several centuries may well disappear once the time horizon is broadened. A second lesson is that the same variable can, at one moment in history, constitute an obstacle to the process of economic development, and then, at another moment, become the driving force of this process. Finally, slow and quantitatively minor changes in a variable can, if repeated over a long period of time, become the latent dynamic that will govern, at a given moment, the transition to a new economic regime."

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The population of most countries is aging and the main caregivers are children. Policy makers are also promoting the provision of care by relatives to delay institutionalization of the elderly. We study the provision of care by children, how assistance is distributed among them, and its effectiveness in delaying institutionalization of the elderly. The main contributions can be summarized as follows. Retirement policies can have negative consequences for frail people with a high number of assistance needs who require daily attention. Children do not coordinate when deciding what to provide for their parent, and the allocation of the help they provide is then inefficient. The results suggest that children are strategic substitutes, but also that the strategic effect is greater for a sister than a brother. This can be explained theoretically by greater productivity in helping women than men. Policy makers should expect that stimulating informal care may accelerate the admission of elderly people with poor health.

When considering the social valuation of a life-year, there is a conflict between two basic intuitions: on the one hand, the intuition of universality, according to which the value of an additional life-year should be universal, and, as such, should be invariant to the context considered. on the other hand, the intuition of complementarity, according to which the value of a life-year should depend on what this extra life-year allows for, and, hence, on the quality of that life-year, because the quantity of life and the quality of life are complement to each other. This paper proposes three distinct accounts of the intuition of universality, and shows that those accounts either conflict with a basic monotonicity property, or lead to indifference with respect to how life-years are distributed within the population. Those results support the abandon of the intuition of universality. But abandoning the intuition of universality does not prevent a social evaluator from giving priority, when allocating life-years, to individuals with the lowest quality of life.

This thesis includes a series of theoretical essays on the macroeconomic study of health, and also offers a reflection on the recent history of economic thought. Its main contribution is to show that health does not necessarily follow from economic development. The first chapter is an investigation of contemporary differences in mortality between the United States and Europe. He proposes an explanation of the American Puzzle, the fact that life expectancy is lower in the United States despite a higher share of GDP devoted to health expenditures. Considering the deleterious effect of long working hours on health, differences in working hours may explain Americans' poor health and excessive spending, emphasizing a trade-off between consumption and health. The second chapter takes a more historical perspective and theorizes the decline in the average skill level of the population during the Industrial Revolution in England, looking at the political motivations of the capitalist class to invest in public health measures that would increase the longevity of workers and their incentives to educate themselves. The nature of technical progress in the nineteenth century, biased towards low-skilled work, may explain why the life expectancy of the working classes did not take off sooner. The third chapter is a reflection on the history of modern macroeconomics. It documents more than thirty years of controversy about the value of the elasticity of labor supply and questions the aggregation of individual behavior and the hypothesis of a representative agent.

This paper uses Shannon’s entropy index to the base 2 to quantify the risk relative to the age at death in terms of bits (i.e. the amount of information revealed by tossing a fair coin). We first provide a simple decomposition of Shannon’s lifetime entropy index that allows us to analyse the determinants of lifetime entropy (in particular its relation with Wiener’s entropy of the event “death at a particular age conditional on survival to that age”) and to study how the risk about the duration of life is resolved as the individual becomes older. Then, using data on 37 countries from the Human Mortality Database, we show that, over the last two centuries, (period) lifetime entropy at birth has exhibited, in all countries, an inverted-U shape pattern with a maximum in the first half of the twentieth century (at 6 bits), and reaches, in the early twenty-first century, 5.6 bits for men and 5.5 bits for women. It is also shown that the entropy age profile shifted from a non-monotonic profile (in the eighteenth and nineteenth centuries) to a strictly decreasing profile (in the twentieth and twenty-first centuries).

We revisit the Tragedy of the Commons in a dynamic overlapping generations economy populated of shepherds who decide how many sheep they let graze on a common parcel of land, while relying on different forms of rationality (Nash players and Kantian players). We examine the dynamics of moral behaviors and land congestion when the prevalence of different types evolves over time following a vertical/oblique socialization process à la Bisin and Verdier (2001). We study the impact of a quota and of a tax on the congestion of land, and we show that introducing a quota may, in some cases, reduce the proportion of Kantians, and worsen the Tragedy of the Commons with respect to the laissez-faire. Ignoring the dynamics of moral traits may lead governments to implement policies that make the Tragedy worse than at the laissez-faire, even though such policies would work well for a fixed population composition.

We study the design of a fair family policy in an economy where parent- hood is regarded either as desirable or as undesirable, and where there is imperfect fertility control, leading to involuntary childlessness/parenthood. Using an equivalent consumption approach in the consumption-fertility space, we .rst show that the identi.cation of the worst-o¤ individuals is not robust to how the social evaluator .xes the reference fertility level. Adopting the ex post egalitarian social criterion, which gives priority to the worst o¤ in realized terms, we then examine the compensation for involuntary childlessness/parenthood. Unlike real-world family policies, a fair family policy does not always involve positive family allowances to (voluntary) parents, and may also, under some reference fertility lev- els, involve positive childlessness allowances. Our results are robust to assuming asymmetric information and to introducing Assisted Reproduc- tive Technologies.

We study the measurement of well-being when individuals have hetero- geneous preferences, including di_erent conceptions of a life worth living. When individuals di_er in the conception of a life worth living, the equivalent income can regard an individual whose life is not worth living as being better o_ than an individual whose life is worth living. In order to avoid that paradoxical result, we reexamine the ethical foundations of well-being measures in such a way as to take into account heterogeneity in the conception of a life worth living. We derive, from simple axioms, an alternative measure of well-being, which is an equivalent income net of the income threshold making lifetime neutral. That new well-being index always ranks an individual whose life is not worth living as worse-o_ than an individual with a life worth living.

Higher mortality among the poor prevents standard poverty measures from quantifying the actual extent of old-age poverty. Whereas existing attempts to deal with the ”missing poor” problem assume the absence of income mobility and assign to the prematurely dead a fictitious income equal to the last income enjoyed, this paper relaxes that assumption in order to study the impact of income mobility on the size of the missing poor bias. We use data on poverty above age 60 in 12 countries from the EU-SILC database, and we compare standard poverty rates with the hypothetical poverty rates that would have prevailed if (i) all individuals, whatever their income, had enjoyed the same survival conditions, and if (ii) all individuals within the same income class had been subject to the same income mobility process. Taking income mobility into account has unequal effects on corrected poverty measures across countries, and, hence, affects international comparisons in terms of old-age poverty.

We examine the e¤ects of the postulated metric on the measurement of well-being, by comparing, in the (income, lifetime) space, two indexes: the equivalent income index and the equivalent lifetime index. Those in- dexes are shown to satisfy di¤erent properties concerning interpersonal well-being comparisons, which can lead to contradictory rankings. While those incompatibilities arise under distinct indi¤erence maps, we also ex- plore the e¤ects of the metric while relying on a unique indi¤erence map, and show that, even in that case, the postulated metric matters for the measurement of well-being. That point is illustrated by quantifying, by those two indexes, the (average) well-being loss due to the Syrian War. Relying on a particular metric leads, from a quantitative perspective, to di¤erent pictures of the deprivation due to the War.

Following Kanbur and Mukherjee (Bull Econ Res 59(4):339–359 2007), a solution to the “missing poor” problem (i.e., selection bias in poverty measures due to income-differentiated mortality) consists in computing hypothetical poverty rates while assigning a fictitious income to the prematurely dead. However, in a dynamic general equilibrium economy, doing “as if” the prematurely dead were still alive is likely to affect wages, output and capital accumulation, with an uncertain effect on poverty. We develop a three-period OLG model with income-differentiated mortality and compare actual poverty rates with hypothetical poverty rates that would have prevailed if everyone faced the survival conditions of the top income class. Including the prematurely dead has an ambiguous impact on poverty, since it affects income distribution through capital dilution, composition effects, and horizon effects. Our results are illustrated by quantifying the impact of income-differentiated mortality on poverty measures for France (1820–2010).

During the last century, fertility has exhibited, in industrialized economies, two distinct trends: the cohort total fertility rate follows a decreasing pattern, while the cohort average age at motherhood exhibits a U-shaped pattern. This paper proposes a Unified Growth Theory aimed at rationalizing those two demographic stylized facts. We develop a three-period OLG model with two periods of fertility, and show how a traditional economy, where individuals do not invest in education, and where income rises push towards advancing births, can progressively converge towards a modern economy, where individuals invest in education, and where income rises encourage postponing births. Our findings are illustrated numerically by replicating the dynamics of the quantum and the tempo of births for cohorts 1906–1975 of the Human Fertility Database.

Demographic aging is often presented as a brake on the economic expansion of nations. But is it really an obstacle to growth? Through what channels does it influence economic activity? How can the welfare state adapt to ageing and the challenges posed by old age dependency? The book presents the tools used by economic analysis to study aging and its multiple interactions with economic activity. While aging can slow growth by reducing the ratio of active to inactive people, several adjustment mechanisms involving savings, education and career length can offset this effect. Beyond its impact on market production, ageing also raises the question for economists of how to take life expectancy into account in measuring the economic performance of nations. Finally, the book examines the major challenges facing the welfare state as a result of ageing, whether in terms of redistribution or the care of dependent elderly people.

The retirement system is usually regarded as giving a fair reward for a long life of labor. However, the fairness of that system can be questioned, on the grounds that only workers who have a su¢ ciently long life benefit from that reward, but not workers who die prematurely. In order to reexamine the fairness of retirement systems under unequal lifetime, this paper compares standard retirement (i.e. individuals work before being retired) with - purely hypothetical - reverse retirement (i.e. individuals are retired before working). We first show that, whereas reverse retirement cannot be a social optimum under the utilitarian criterion (unlike standard retirement), reverse retirement can be optimal under the ex post egalitarian criterion (giving priority to the worst-o¤ in realized terms). From an ex post egalitarian perspective, reverse retirement dominates standard retirement in economies with high life expectancy and a flat age-productivity profile, whereas the opposite holds in less developed economies.

We examine the redistributive impact of working time regulations in an economy with unequal lifetimes. We first compare the laissez-faire equilibrium with the ex post egalitarian optimum, where the realized lifetime well-being of the worst off (usually the short-lived) is maximized, and show that, unlike the laissez-faire, this social optimum involves an increasing working time age profile and equalizes the realized lifetime well-being of the short-lived and the long-lived. We then examine whether working time regulations can compensate the short-lived. It is shown that uniform working time regulations cannot improve the situation of the short-lived with respect to the laissez-faire, and can only reduce well-being inequalities at the cost of making the short-lived worse off. However, age-specific regulations involving lower working time for the young and higher working time for the old make the short-lived better off, even though such regulations may not fully eradicate well-being inequalities.

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This article analyzes the main risks associated with aging and how to prevent them. These risks are those of a life that is too long and not financed, of illness, of loss of autonomy, of institutional or family mistreatment and finally of impecuniosity.

We develop a 3-period overlapping generations (OLG) model where individuals borrow at the young age in order to finance their education. Education does not only increase future wages, but also raises the duration of life, which, in turn, can affect education, in line with Ben-Porath (1967). We examine the conditions under which the Ben-Porath effect prevails. Although the existence of a positive Ben-Porath effect requires, under exogenous longevity, a change in lifetime hours of work, we find, under endogenous longevity, that a positive Ben-Porath effect arises even when old-age labor is fixed. It is also shown that the Ben-Porath effect may not be robust to allowing for adjustments in production factor prices. On the policy side, we show that the social optimum can be decentralized provided the capital stock is set to the Modified Golden Rule level. Finally, we introduce intracohort heterogeneity in learning ability, and we show that, under asymmetric information, the second-best optimal non-linear tax scheme involves a downward distortion in the education of less able types, which reinforces the longevity gap in comparison with the first-best.

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During the last century, fertility has exhibited, in industrialized economies, two distinct trends: the cohort total fertility rate follows a decreasing pattern, while the cohort average age at motherhood exhibits a U-shaped pattern. This paper proposes a Unified Growth Theory aimed at rationalizing those two demographic stylized facts. We develop a three-period OLG model with two periods of fertility, and show how a traditional economy, where individuals do not invest in education, and where income rises push towards advancing births, can progressively converge towards a modern economy, where individuals invest in education, and where income rises encourage postponing births. Our findings are illustrated numerically by replicating the dynamics of the quantum and the tempo of births for cohorts 1906-1975 of the Human Fertility Database.

During the last two centuries, fertility has exhibited, in industrialized economies, two distinct trends: the cohort total fertility rate follows a decreasing pattern, while the cohort average age at motherhood exhibits a U-shaped pattern. This paper proposes a unified growth theory aimed at rationalizing those two demographic stylized facts. We develop a three-period OLG model with two periods of fertility, and show how a traditional economy, where individuals do not invest in higher education, and where income rises push towards advancing births, can progressively converge towards a modern economy, where individuals invest in higher education, and where income rises encourage postponing births. Our findings are illustrated numerically by replicating the dynamics of the quantum and the tempo of births for Swedish cohorts born between 1876 and 1966.

This thesis studies the impact of financial markets on economic growth in the MENA region. The first chapter presents the economic, demographic, and financial situation in the region. The second chapter presents a nested-generation general equilibrium model that links economic growth, financial markets, and demographic change. The model is calibrated and simulated for three countries in the region with different demographic trends. The results show that a more efficient financial sector leads to better economic performance and higher employment rates. Moreover, young people are the primary beneficiaries of financial sector reform. The third chapter empirically tests the impact of the financial sector on the real sector and growth in 15 MENA countries and finds a negative impact of financial sector development on growth. These results highlight the inefficiency of the financial sector in the region and the urgent need to target policies that improve the efficiency of the sector, not just its size. In the fourth chapter, a financial market development indicator is constructed for countries in the region. This indicator is based on the three pillars of the macroeconomic environment, financial institutions, and financial markets. It takes into account the specificities of the MENA countries and allows ranking the countries of the region according to their performance in the financial sector.

Demographic aging is often presented as a brake on the economic expansion of nations. But is it really an obstacle to growth? Through what channels does it influence economic activity? How can the welfare state adapt to ageing and the challenges posed by old age dependency? The book presents the tools used by economic analysis to study aging and its multiple interactions with economic activity. While aging can slow growth by reducing the ratio of active to inactive people, several adjustment mechanisms involving savings, education and career length can offset this effect. Beyond its impact on market production, ageing also raises the question for economists of how to take life expectancy into account in measuring the economic performance of nations. Finally, the book examines the major challenges facing the welfare state as a result of ageing, whether in terms of redistribution or the care of dependent elderly people.

The back cover states: "Demographic aging is often presented as a brake on the economic expansion of nations. But is it really an obstacle to growth? Through what channels does it influence economic activity? How can the welfare state adapt to ageing and the challenges posed by the dependence of the elderly? The book presents the tools used by economic analysis to study aging and its multiple interactions with economic activity. While aging can slow growth by reducing the ratio of active to inactive people, several adjustment mechanisms relating to savings, education and career length can offset this effect. Beyond its impact on market production, ageing also raises the question for economists of how to take life expectancy into account when measuring the economic performance of nations. Finally, the book examines the major challenges facing the welfare state as a result of ageing, whether in terms of redistribution or the care of dependent elderly people.

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We study the compensation of prematurely dead people in an economy where production generates pollution, and where pollution reduces, beyond a certain threshold, the chances of survival. To do so, we characterize the ex post egalitarian optimum and compare it to the laissez-faire equilibrium and the utilitarian optimum. When the pollution threshold above which premature mortality occurs is high, the ex-post egalitarian optimum requires a pollution equal to this threshold and lower than those prevailing in the laissez-faire and the utilitarian optimum. But when the critical pollution threshold is low, the pollution level associated with the ex post egalitarian optimum is equal to that of the laissez-faire optimum and higher than that of the utilitarian optimum.

Income-differentiated mortality, by reducing the share of poor persons in the population, leads to the “Mortality Paradox”: the worse the survival conditions of the poor are, the lower is the measured poverty. We show that FGT measures (Foster et al., 1984) are, in general, not robust to variations in survival conditions. Then, following Kanbur and Mukherjee (2007), we propose to adjust FGT poverty measures by extending the income profiles of the prematurely dead, and we identify the condition under which so-adjusted FGT measures are robust to mortality changes. Finally, we show, on the basis of data from 2007 on old-age poverty in 11 European economies, that the effect of extending income profiles of the prematurely dead on poverty measurement varies with: (1) the fictitious income assigned to the prematurely dead. (2) the degree of poverty aversion. (3) the shape of the (unadjusted) income distribution. and (4) the strength of the income/mortality relationship.

This paper uses an equivalent income approach to quantify the domestic welfare loss due to the Syrian Civil War. Focusing on the (income, life expectancy) space, we show that the equivalent income has fallen by about 60 % in comparison to the pre-conflict level. We also find that the differential between the equivalent income and the standard income for 2016 lies between $75 and $144. Although this low willingness to pay for coming back to pre-conflict survival conditions can be explained by extreme poverty due to the War, the small gap between standard and equivalent incomes tends to question the extra value brought by the latter for the measurement of standards of living in situations of severe poverty. We examine some solutions to that puzzle, including a more general specification of the utility function, the shift from an ex ante approach (valuing changes in life expectancy) to an ex post approach (valuing changes in distributions of realized longevities), as well as considering population ethical aspects. None of those solutions is fully successful in solving the puzzle.

Higher mortality among the poor leads to selection biases in poverty measures. Whereas existing attempts to deal with the "missing poor" problem assume the absence of income mobility and assign to the prematurely dead a …ctitious income equal to the last income enjoyed, this paper relaxes that assumption in order to study the impact of income mobility on the size of the missing poor bias. We use data on poverty above age 60 in 12 countries from the EU-SILC database, and we compare standard poverty rates with the hypothetical poverty rates that would have pre- vailed if (i) all individuals, whatever their income, had enjoyed the same survival conditions (the ones of the highest income class), and if (ii) all individuals within the same income class had been subject to the same income mobility process. It is shown that taking income mobility into ac- count has adverse effects on corrected poverty measures across countries, and that it affects international comparisons in terms of old-age poverty.

This paper questions the demographic consequences of birth postponement in Europe. Starting from the fact that there is no obvious link between the timing of first births and fertility levels in Europe, we deliver some indication that under certain circumstances, birth postponement involves the potential of facilitating rather than impedes starting a family. We apply a synthetic cohort approach and distinguish between different socio-economic determinants of the timing of first births by using the European Union Statistics on Income and Living Conditions (EU-SILC). Data is compiled specifically to reduce endogeneity and to eliminate structure effects. We find that the probability of becoming a mother is higher for those women who postpone first childbirth due to education and career investment in comparison to those who postpone due to unrealized labour market integration. Educated and economically active women certainly postpone first childbirth in comparison to women who are less educated and who are not working, but they end up with a higher probability of starting a family in comparison to women who are less educated and not working. The article contributes to the academic discussion of the circumstances that may lead birth postponement to result in higher fertility for younger cohorts in European countries.

While little agreement exists regarding the taxation of bequests in general, there is a widely held view that accidental bequests should be subject to a confi…scatory tax. We propose to reexamine the optimal taxation of accidental bequests in an economy where individuals care about what they leave to their offspring in case of premature death. We show that, whereas the conventional 100 % tax view holds under the standard utilitarian social welfare criterion, it does not hold under the ex post egalitarian criterion, which assigns a strong weight to the welfare of unlucky short-lived individuals. From an egalitarian perspective, it is optimal not to tax, but to subsidize accidental bequests. We examine the robustness of those results in a dynamic OLG model of wealth accumulation, and show that, whereas the sign of the optimal tax on accidental bequests depends on the form of the joy of giving motive, it remains true that the 100 % tax view does not hold under the ex post egalitarian criterion.

Background: This article questions the demographic consequences of birth postponement in Europe. Objective: Starting from the fact that there is no obvious link between the timing of first births and fertility levels in Europe, we find that under certain circumstances, birth postponement potentially facilitates rather than impedes starting a family. Methods: We apply a synthetic cohort approach and distinguish between different socioeconomic determinants of the timing of first births by using the European Union Statistics on Income and Living Conditions (EU-SILC). Data is compiled specifically to reduce endogeneity and to eliminate structure effects. Results: We find that the probability of becoming a mother is higher for women who postpone first childbirth due to education and career investment than for women who postpone due to unrealized labour market integration. Conclusions: Educated and economically active women certainly postpone first childbirth in comparison to women who are less educated and who are not working, but they end up with a higher probability of starting a family. Contribution: The article contributes to the academic discussion of circumstances that may lead to birth postponement resulting in higher fertility for younger cohorts in European countries.

A premature death unexpectedly brings a life and a career to their end, leading to substantial welfare losses. We study the retirement decision in an economy with risky lifetime and compare the laissez-faire with egalitarian social optima. We consider two social objectives: (1) the maximin on expected lifetime welfare, allowing for a compensation for unequal life expectancies, and (2) the maximin on realized lifetime welfare, allowing for a compensation for unequal lifetimes. The latter optimum involves, in general, decreasing lifetime consumption profiles as well as raising the retirement age. This result is robust to the introduction of unequal life expectancies and unequal productivities.

We revisit the Tragedy of the Commons in an dynamic overlapping generations economy peopled of shepherds who decide how many sheep they let graze on a common parcel of land, while relying on di fferent forms of rationality (Nash players, Pure or Impure Kantian players). We examine the dynamics of heterogeneity and land congestion when the prevalance of those di fferent forms of rationality evolves over time follow- ing a vertical/oblique socialization process a la Bisin and Verdier (2001). We study the impacts of a quota and of a tax on the congestion of land, and we show that introducing a quota may, in some cases, reduce the proportion of Kantians (Pure and Impure), and worsen the Tragedy of Commons with respect to the laissez-faire. Finally, we examine whether a government should promote either a Pure or an Impure Kantian morality, by comparing the relative fi tness of Pure/Impure Kantians, and their interactions with the congestion of land.

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Although it is widely acknowledged that life is risky, it is difficult to provide an intuitive indicator of the riskiness of life, whose metric would have a concrete counterpart for the layman. This paper uses the Shannon entropy index to the base 2 to quantify, in terms of bits (i.e. the amount of information revealed by tossing a fair coin), the risk relative to the age at death in 37 countries from the Human Mortality Database. We identify 5 major stylized facts: (1) over the last two centuries, (period) life entropy at birth exhibits an inverted U shape pattern with a maximum in the first half of the 20th century (at about 6 bits). (2) over the last 150 years, Western countries have converged in terms of (period) life entropy at birth towards levels of 5.6 bits for men and 5.5 bits for women. (3) curves of (period) life entropy at birth for men and women crossed during the 20th century. (4) the entropy age profi le shifted from a non-monotonic profi le (in the 18th and 19th centuries) to a strictly decreasing pro file (in the 20th and 21th centuries). (5) men exhibit a higher life entropy than women below ages 50-55, and a lower one after ages 50-55.

This paper characterizes the optimal level of pollution in a two-period OLG economy where pollution deteriorates survival conditions. We compare two long-run social optima: on the one hand, the average utilitarian optimum, where the long-run average well-being is maximized, and, on the other hand, the ex post egalitarian optimum, where the realized well-being of the worst-off at the stationary equilibrium is maximized. It is shown that the ex post egalitarian optimum involves, under weak conditions, a higher level of pollution in comparison with the utilitarian optimum. This result is robust to introducing health expenditures in the survival function. Finally, we examine the decentralization of those two social optima, and we compare the associated optimal taxes on capital income aimed at internalizing the pollution externality.

This thesis focuses on the long-term relationship between longevity and economic development. In the first chapter, I analyze the impact of health spending on growth and welfare. To do so, I study the influence of the tax rate in an economy with endogenous lifetimes (Chakraborty (2004)). I determine the tax rate that maximizes the growth rate. Then I look at the changes in the level of output in the steady state with respect to the tax rate. Finally, I study the tax rate that maximizes welfare in the steady state. In the second chapter, I analyze the impact on growth of agent-chosen health expenditures. In effet, I develop an endogenous growth model in which individuals can spend resources to live longer in their retirement period. I give a full characterization of the dynamic general equilibrium and then determine the impact on health care spending growth. Enfin, the third chapter studies the theoretical impact of aging on the sectoral allocation of workers. I develop a multi-sector model in which I examine the consequences on income per worker and the sectoral allocation of workers of a longevity and fertility shock. I show that, unlike uni-sectoral models, income is not necessarily monotonic with respect to demographic variables. Realistic demographic shocks produce non-negligible movements of workers.

In the so-called Rapport Sauvy (1962), the French demographer Alfred Sauvy argued that Wallonia’s fertility rate was socially suboptimal, and recommended a 20 % rise of fertility, on the grounds that a society with too low a fertility leads to a low-productive economy composed of old workers having old ideas. This paper examines how Sauvy’s intuition can be incorporated in the Samuelsonian optimal fertility model (Samuelson, Int Econ Rev 16:531–538, 1975). We build a four-period OLG model with physical capital and with two generations of workers (young and old), the skills of the latter being subject to some form of decay. We characterize the optimal fertility rate and show that this equalizes, at the margin, the sum of the capital dilution effect (Solow effect) and the labour age-composition effect (Sauvy effect) with the intergenerational redistribution effect (Samuelson effect). Numerical simulations show that it is hard, from a quantitative perspective, to reconcile Sauvy’s recommendation with facts. This leads us to examine other potential determinants of optimal fertility, by introducing technological progress and a more general social welfare function.

Life expectancy at birth has more than doubled in Europe since the early 19th century. This demographic trend constitutes a major victory against scarcity, but raises also deep challenges to the Welfare State, concerning the sustainability and the equity of the social protection system. This paper surveys recent developments in the economic analysis of longevity, both at the positive and the normative levels. Taking mortality risks into account is shown to affect the study of the life cycle model significantly, in particular concerning the strength of life horizon effects. It raises also, at the level of normative foundations for policy-making, a dilemma between ex ante and ex post valuations. Finally, we explore the design of policy reforms under varying longevity, in fields including preventive and curative policies, education, pension, and wealth taxation.

Due to the aging process, the provision of long-term care (LTC) to the dependent elderly has become a major challenge of our epoch. But our societies are also characterized, since the 1970s, by a postponement of births, which, by raising the intergenerational age gap, can affect the provision of LTC by children. In order to examine the impact of those demographic trends on the optimal policy, we develop a four-period OLG model where individuals, who receive children's informal LTC at the old age, must choose, when being young, how to allocate births along their life cycle. It is shown that, in line with empirical evidence, early children provide more LTC to their elderly parents than do late children, because they face a lower opportunity cost of providing LTC. When comparing the laissez-faire with the long-run social optimum, it appears that individuals have, at the laissez-faire, too few early births, and too many late births. We then study, in first-best and second-best settings, how the social optimum can be decentralized by encouraging early births, in such a way as to reduce the social burden of LTC provision.

In the context of a rapidly ageing population, this thesis explores the links between health and care methods for dependent elderly people and addresses the issue of financing dependence. Meeting the assistance needs of dependent elderly people is a central objective of public policy. Chapter 1 estimates the effect of informal (i.e. family) and formal (i.e. professional) home help on the mental health of dependent elderly people in France. The results show that informal help reduces the risk of depression and that formal help can improve general mental health. Recent studies recognize that helping a dependent relative has negative effects on the health of caregivers and emphasize the importance of supporting them. Chapter 2 focuses on the effect of social support on the health of informal caregivers. Finally, given the financial and fiscal pressure on public systems, Chapter 3 examines the extent to which Europeans would be able to finance their periods of dependency on the basis of their income and their financial and real estate assets. It also looks at the role of lifetime mortgages. The simulations show that only a small proportion of individuals would be able to finance all their LTC expenses. On the other hand, real estate assets could play an important role in financing LTC.

In this article, we study the impact of differences in longevity on the design of public policies, particularly those related to retirement. First, we show that even though life expectancy has increased dramatically over the last century, large disparities remain. Second, we study from a normative point of view how differences in longevity are generally taken into account in life-cycle models and show that certain assumptions can have strong implications in terms of intragenerational redistribution. We identify at least three arguments in favor of redistribution to agents with low longevity: multi-period inequality aversion, mortality risk aversion, and compensation for characteristics for which agents are not responsible. We then extend our analysis to take into account the fact that individuals may be partly responsible for their longevity.Finally, we link these results to current debates on pension system reform. We show that, in general, because pensions are conditional on the survival of beneficiaries, public pension systems will redistribute resources from short-lived agents to long-lived ones. We provide suggestions for reforms that would aim to take better account of these differences in longevity and, in particular, those relating to the creation of a "longevity annuity" as desired by the Comité d'Amours and to the development of independent insurance, whether private or public.

Changes in the birth rate are most often measured by a single indicator, the number of children per woman. However, the birth calendar, i.e., the ages at which a mother gives birth to her children, sheds useful light on sociodemographic dynamics. In particular, the age of childbirth is a social marker, as it increases with the parents' education and income levels. Today, among those with the fewest social prospects, we often find girl-mothers. It is clear that the timing of births is naturally linked to the other important decisions that punctuate the life cycle: the number of children, of course, but also the time devoted to education and the role of women in the labor market. Although there is a tendency to be alarmed by the postponement of births, the ages of childbearing are not variables or objectives of public policy. in fact, the opposite is true: they react indirectly to certain policies, and can thus cancel out their effects. In this booklet, the birth calendar is used to read certain social, economic and demographic dynamics specific to European societies and, in particular, to French and German societies. We put into perspective the phenomenon of postponed births that has characterized European demography for several decades by analyzing precisely its motives and implications.

The back cover states: "For several decades, the age of childbirth has been declining. Based on demographic and economic data from twenty-eight European countries, the authors analyze the causes and consequences of this postponement of births, with particular emphasis on France and Germany. They identify two predominant factors: the length of mothers' studies and the stability of their professional situation. The age of childbirth is a social marker that allows an original reading of the dynamics specific to each country. This booklet shows that the decline in the age of childbirth is not, in general, associated with a decline in fertility, even if Germany constitutes an interesting counter-example. This sheds light on the difficult question of the effectiveness of pro-birth policies and their effects on individual decisions about the age of childbirth.

Births postponement is a key demographic trend of the last decades. To examine its social desirability, we study how utilitarian criteria rank histories equal on all dimensions except the age at which individuals give birth to their children. We develop a T-period dynamic overlapping generations economy with a fixed living space, where individual welfare is increasing in the available space per head, and where agents have children in one out of two fertility periods. When comparing finite histories with an equal total number of life-periods, classical, average and critical-level utilitarian criteria select the same fertility timing, i.e. the one leading to the most smoothed population path. When comparing infinite histories with stationary population sizes, utilitarian criteria may select different birth timings, depending on individual utility functions. Those results are compared with the ones obtained when agents value coexistence time with their descendants. Finally, we identify conditions under which a shift from an early births regime to a late births regime is socially desirable.

Individuals care not only about their own survival, but also about the survival of other persons. However, little attention has been paid so far to measuring the contribution of longer coexistence time to living standards. For that purpose, we develop a measure of coexistence time - the joint life expectancy -, which quantifies the average duration of existence for a group of persons. Then, using a lifecycle model with risky lifetime, we construct an equivalent consumption measure incorporating gains in single and joint life expectancies. An empirical application to France (1820-2010) shows that, assuming independent individual mortality risks, the rise in joint life expectancies contributed to improve standards of living significantly. We examine the robustness of that result to the introduction of dependent mortality risks using copulas, and we show that equivalent consumption patterns are robust to introducing risk dependence.

Individuals care not only about their own survival, but also about the survival of other persons. However, little attention has been paid so far to measuring the contribution of longer coexistence time to living standards. For that purpose, we develop a measure of coexistence time—the joint life expectancy—which quantifies the average duration of existence for a group of persons. Then, using a lifecycle model with risky lifetime, we construct an equivalent consumption measure incorporating gains in single and joint life expectancies. An empirical application to France (1820–2010) shows that, assuming independent individual mortality risks, the rise in joint life expectancies contributed to improve standards of living significantly. We examine the robustness of that result to the introduction of dependent mortality risks using copulas, and we show that equivalent consumption patterns are robust to introducing risk dependence.

Births postponement is a key demographic trend of the last decades. To examine its social desirability, we study how utilitarian criteria rank histories equal on all dimensions except the age at which individuals give birth to their children. We develop a T-period dynamic overlapping generations economy with a fixed living space, where individual welfare is increasing in the available space per head, and where agents have children in one out of two fertility periods. When comparing finite histories with an equal total number of life-periods, classical, average and critical-level utilitarian criteria select the same fertility timing, i.e. the one leading to the most smoothed population path. When comparing infinite histories with stationary population sizes, utilitarian criteria may select different birth timings, depending on individual utility functions. Those results are compared with the ones obtained when agents value coexistence time with their descendants. Finally, we identify conditions under which a shift from an early births regime to a late births regime is socially desirable.

No summary available.

We develop a 3-period overlapping generations (OLG) model where individuals borrow at the young age to finance their education. Education does not only increase future wages, but, also, raises the duration of life, which, in turn, affects education choices, in line with Ben Porath (1967). We first identify conditions that guarantee the existence of a stationary equilibrium with perfect foresight. Then, we reexamine the conditions under which the Ben-Porath effect prevails, and emphasize the impact of human capital decay and preferences. We compare the laissez-faire with the social optimum, and show that the latter can be decentralized provided the laissez-faire capital stock corresponds to the one satisfying the modified Golden Rule. Finally, we introduce intracohort heterogeneity in the learning ability, and we show that, under asymmetric information, the second-best optimal non-linear tax scheme involves a downward distortion in the level of education of less able types, which, quite paradoxically, would reinforce the longevity gap in comparison with the laissez-faire.

Due to the ageing process, the provision of long-term care (LTC) to the dependent elderly has become a major challenge of our epoch. But at the same time, our societies are characterized, since the 1970s, by a significant postponement of births. This paper aims at examining the impact of those demographic trends on the optimal family policy. We develop a four-period OLG model where individuals, who receive children's informal LTC at the old age, must choose, when being young, how to allocate births along their lifecycle. It is shown that early children provide more LTC to their elderly parents than late children, because of the lower opportunity cost of providing LTC when being retired. In comparison with the social optimum, individuals have, at the laissez-faire, too few children early in their life, and too many later on in their life. The decentralization of the first-best optimum requires thus to subsidize early births. We study also the design of the optimal subsidy on early births in a second-best setting. Its level depends on efficiency and equity issues, as well as on its incidence on the long-run population composition and on LTC provision.

An early death is, undoubtedly, a serious disadvantage. However, the compensation of short-lived individuals has remained so far largely unexplored, probably because it appears infeasible. Indeed, short-lived agents can hardly be identified ex ante, and cannot be compensated ex post. We argue that, despite those difficulties, a compensation can be carried out by encouraging early consumption in the life cycle. In a model with heterogeneous preferences and longevities, we show how a specific social criterion can be derived from intuitive principles, and we study the corresponding optimal policy under various informational assumptions.

Under the existing marriage contracts, the default length of a marriage is the total remaining lifespan of the spouses. This paper aims at questioning the standard long-term marriage contracts by exploring the conditions under which short-term contracts would be more desirable. Using a two-period collective household model, we show that, under general conditions on individual preferences and household production technology, short-term marriage contracts, if available, would dominate long-term contracts. Moreover, the recent equalization of bargaining power within the household is shown to make short-term contracts even more desirable than in the past.

Pollution is a major cause of mortality, leading to substantial inequalities in lifetime well-being across individuals. This paper characterizes the optimal level of pollution in a two-period OLG economy where pollution deteriorates survival conditions. We compare two long-run social optima: on the one hand, the average utilitarian optimum, where the long-run average well-being is maximized, and, on the other hand, the ex post egalitarian optimum, where the well-being of the worst-o¤ at the stationary equilibrium is maximized. It is shown that the ex post egalitarian optimum involves a higher level of pollution in comparison with the utilitarian optimum. This result is robust to introducing health expenditures in the survival function. Finally, we examine the decentralization of those two social optima, and we compare the associated optimal taxes on capital income aimed at internalizing the pollution externality.

Following Ben-Porath [1967. “The Production of Human Capital and the Life-Cycle of Earnings.” Journal of Political Economy 75 (3): 352–365], the influence of life expectancy on education and on human capital has attracted much attention among growth theorists. Whereas existing growth models rely on an education decision made either by the child or by his parent, we revisit the Ben-Porath effect by modelling education as the outcome of bargaining between the parent and the child. We develop a three-period overlapping generations (OLG) model, where human capital increases life expectancy and shows that as a result of the unequal remaining lifetimes faced by parents and children, the form of the Ben-Porath effect depends on how bargaining power is distributed within the family, which in turn affects long-run economic dynamics. Using data on 16 OECD countries (1940–1980), we show that introducing family bargaining helps to rationalize the observed education patterns across countries.

We study the compensation of prematurely dead people in an economy where production generates pollution, and where pollution reduces, beyond a certain threshold, the chances of survival. To do so, we characterize the ex post egalitarian optimum and compare it to the laissez-faire equilibrium and the utilitarian optimum. When the pollution threshold above which premature mortality occurs is high, the ex-post egalitarian optimum requires a pollution level equal to this threshold, and lower than those prevailing in the laissez-faire and the utilitarian optimum. But when the critical pollution threshold is low, the pollution level associated with the ex-post egalitarian optimum is equal to that prevailing in the laissez-faire equilibrium, and higher than that associated with the utilitarian optimum.

In this article, we study the impact of differences in longevity on the design of public policies, particularly those related to retirement. First, we show that even though life expectancy has increased dramatically over the last century, large disparities remain. Second, we study from a normative point of view how differences in longevity are generally taken into account in life-cycle models and show that certain assumptions can have strong implications in terms of intra-generational redistribution. We identify at least three arguments in favor of redistribution to agents with low longevity: aversion to intertemporal inequality, aversion to mortality risk, and compensation for characteristics for which agents are not responsible. We then extend our analysis to account for the fact that individuals may be, in part, responsible for their longevity. Finally, we link these results to current debates on pension reform. We show that, in general, because pensions are conditional on the survival of beneficiaries, public pension systems will redistribute resources from short-lived agents to long-lived ones. We provide suggestions for reforms that would aim to take better account of these differences in longevity, and in particular, those relating to the creation of a "longevity annuity" as desired by the Comité d'Amours and the development of independent insurance, whether private or public.

Parenthood postponement is a key demographic trend of the last three decades. In order to rationalize that stylized fact, we extend the canonical model by Barro and Becker (Econometrica 57:481–501, 1989) to include two—instead of one—reproduction periods. We examine how the cost structure of early and late children in terms of time and goods affects the optimal fertility timing. Then, we identify conditions that guarantee the existence and uniqueness of a stationary equilibrium with a stationary cohort size. Finally, we examine how the model can rationalize the observed postponement of births, and we highlight two plausible causes: (1) a general rise in the cost of children in terms of goods and (2) a decline in the degree of family altruism.

In the presence of differential mortality by income, standard measures of poverty do not only capture true poverty, but also reflect the selection process induced by differential mortality. One solution to this type of selection bias is to extend the income profiles of the prematurely deceased to include them in the poverty measure using a dummy income. The present study proposes to analyze the effect of age on the size of the selection bias. To this end, we exploit age-specific poverty data in Belgium and compare conventional poverty measures with adjusted poverty measures obtained by extending the income profiles of the prematurely deceased. We show that, although the gap between adjusted and unadjusted measures is larger at higher ages of life, selection bias is nevertheless present at all ages.

A premature death unexpectedly brings a life and a career to their end, leading to substantial welfare losses. We study the retirement decision in an economy with risky lifetime, and compare the laissez-faire with egalitarian social optima. We consider two social objectives: (1) the maximin on expected lifetime welfare (ex ante), allowing for a compensation for unequal life expectancies. (2) the maximin on realized lifetime welfare (ex post), allowing for a compensation for unequal lifetimes. The latter optimum involves, in general, decreasing lifetime consumption profiles, as well as raising the retirement age, unlike the ex ante egalitarian optimum. This result is robust to the introduction of unequal life expectancies and unequal productivities. Hence, the postponement of the retirement age can, quite surprisingly, be defended on egalitarian grounds --although the conclusion is reversed when mortality strikes only after retirement.

This paper examines the relevancy of the Ecological Footprint indicator for the study of environmental justice between generations. While EF statistics--measuring the pressure put on nature by generations co-existing at a particular period under the prevailing production technology--can hardly be interpreted on its own, it is argued that interpretational difficulties vanish once the EF is corrected for changes in technology, and once it is made explicit that the EF is concerned with environmental justice. Thus, what should be interpreted is not a single EF statistic, but the entire EF distribution. Moreover, although usual interpretations of EF figures consist of comparing the actual pressure put on nature with the one allowing nature's regeneration, it is argued that this physical interpretation is not the only possible one, and that EF measures allow a--normative and descriptive--study of intergenerational justice under ethical frameworks other than resources-centred sustainability.

We use the theory of rationalizable choices to study the survival and the extinction of types (or traits) in evolutionary OLG models. Two properties of evolutionary processes are introduced: rationalizability by a tness ordering (i.e. only the most fit types survive) and interactivity (i.e. a withdrawal of types a effects the survival of other types). Those properties are shown to be logically incompatible. We then examine whether the evolutionary processes at work in canonical evolutionary OLG models satisfy rationalizability or interactivity. We study n-types versions of the evolutionary OLG models of Galor and Moav (2002) and Bisin and Verdier (2001), and show that, while the evolutionary process at work in the former is generally rationalizable by a tness ordering, the opposite is true for the latter, which exhibits, in general, interactivity.

In the context of unequal deterministic longevities, classical utilitarianism exhibits, under time-additive individual preferences, a counterintuitive tendency to redistribute resources from short-lived agents towards long-lived agents, against any intuition for compensation. We examine the robustness of that result to the introduction of risky lifetime, and to a broader class of individual preferences. It is shown that classical utilitarianism remains unable to provide, in that broader framework, a general redistribution towards the short-lived. Then, we propose a remedy, which consists in imputing, when solving the social planner's allocation problem, the consumption equivalent of a long life to the consumption of long-lived agents. This compensation-constrained utilitarianism is shown to reduce welfare inequalities across agents with unequal lifetimes.

We use the theory of rationalizable choices to study the survival and the extinction of types (or traits) in evolutionary OLG models. Two properties of evolutionary processes are introduced: rationalizability by a fitness ordering (i.e. only the most fit types survive) and interactivity (i.e. a withdrawal of types affects the survival of other types). Those properties are shown to be logically incompatible. We then examine whether the evolutionary processes at work in canonical evolutionary OLG models satisfy rationalizability or interactivity. We study nn-type version of the evolutionary OLG models of Galor and Moav (2002) and Bisin and Verdier (2001), and show that, while the evolutionary process at work in the former is generally rationalizable by a fitness ordering, the opposite is true for the latter, which exhibits, in general, interactivity.

No summary available.

Individuals save for their old days, but not all of them enjoy the old age. This paper characterizes the optimal capital accumulation in a two-period OLG model where lifetime is risky and varies across individuals. We compare two long-run social optima: (1) the average utilitarian optimum, where steady-state average welfare is maximized. (2) the egalitarian optimum, where the welfare of the worst-off at the steady-state is maximized. It is shown that, under plausible conditions, the egalitarian optimum involves a higher capital and a lower fertility than the utilitarian optimum. Those inequalities hold also in a second-best framework where survival conditions are exogenously linked to the capital level.

The public provision of long-term care (LTC) can replace family-provided LTC when adults are not sufficiently altruistic towards their parents. But State intervention can modify the transmission of values and reduce the long-run prevalence of family altruism. To characterize the optimal LTC policy, we develop a three-period OLG model where the adult population is divided into altruistic and non-altruistic agents, and where the transmission of altruism follows a socialization process 'a la Bisin and Verdier (2001, The economics of cultural transmission and the dynamics of preferences. Journal of Economic Theory 97:298-319). It is shown that public LTC benefits, by reducing parental investment in children, make the long-run survival of family altruism less likely. However, whether crowding out arises or not depends on individual preferences and on the socialization mechanism at work. We also study the incompatibility of the optimal short-run LTC benefits with long-run social welfare maximization. Finally, we discuss the robustness of our results to introducing savings and universal LTC benefits.

We study the optimal subsidy on prevention against premature death in an economy composed of two-person households, where the survival of the spouse matters, either because of self-oriented coexistence concerns or because of altruism. Under a noncooperative household model, the laissez-faire prevention levels are shown to be lower than the first-best levels, to an extent that is increasing in self-oriented coexistence concerns and decreasing in spousal altruism. The decentralization of the social optimum thus requires a subsidy on prevention depending on the precise type of coexistence concerns. Our results are shown to be globally robust to the introduction of imperfect observability of preferences, life insurance, imperfect marriage matching, and myopia. We conclude by studying the optimal prevention in a cooperative household model with unequal bargaining power.

Under income-differentiated mortality, poverty measures reflect not only the "true" poverty, but, also, the interferences or noise caused by the survival process at work. Such interferences lead to the Mortality Paradox: the worse the survival conditions of the poor are, the lower the measured poverty is. We examine several solutions to avoid that paradox. We identify conditions under which the extension, by means of a fictitious income, of lifetime income profiles of the prematurely dead neutralizes the noise due to differential mortality. Then, to account not only for the "missing" poor, but, also, for the "hidden" poverty (premature death), we use, as a fictitious income, the welfare-neutral income, making indifferent between life continuation and death. The robustness of poverty measures to the extension technique is illustrated with regional Belgian data.

We explore the optimal fertility timing in a four-period OLG economy with physical capital, whose specificity is to include not one, but two reproduction periods. It is shown that, for a given total fertility rate, the economy exhibits quite different dynamics, depending on the timing of births. If all births take place in the late reproduction period, there exists no stable stationary equilibrium and the economy exhibits cyclical dynamics due to labor growth fluctuations. We characterize the long-run social optimum and show that optimal consumptions and capital depend on the optimal cohort growth factor, so that there is no one-to-one substitutability between early and late fertility. We also extend Samuelson's Serendipity Theorem to our economy and study the robustness of our results to: (1) endogenizing fertility timing, (2) assuming rational anticipations about factor prices, (3) adding a third reproduction period.

Although the optimal public policy under an endogenous number of children has been widely studied, the optimal public intervention under an endogenous timing of births has remained largely unexplored. This paper examines the optimal family policy when the timing of births is chosen by individuals who differ as to how early fertility weakens future earnings. We analyze the design of a policy of family allowances and of public pensions in such a setting, under distinct informational environments. Endogenous childbearing ages is shown to affect the optimal policy through the redistribution across the earnings dimension and the internalization of fertility externalities. Contrary to common practice, children benefits differentiated according to the age of parents can be part of the optimal family policy. Our results are robust to introducing: (i) children as durable "goods". (ii) education choices. (iii) varying total fertility.

Our societies are witnessing a steady increase in longevity. This demographic evolution is accompanied by some convergence across countries, whereas substantial longevity inequalities persist within nations. The goal of this article is to survey some crucial implications of changing longevity on the design of optimal public policy. For that purpose, we first focus on some difficulties raised by risky and varying lifetime for the representation of individual and social preferences. Then, we explore some central implications of changing longevity for optimal policy making, regarding prevention against premature death, pension policies, and long-term care.

Income-differentiated mortality, by reducing the share of poor persons in the population, leads to what can be called the "Mortality Paradox": the worse the survival conditions of the poor are, the lower the measured poverty is. We show that the extent to which FGT measures (Foster Greer Thorbecke 1984) underestimate old-age poverty under income-differentiated mortality depends on whether the prematurely dead would have, in case of survival, suffered from a more severe poverty than the average surviving population. Taking adjusted FGT measures with extended lifetime income profiles as a benchmark, we identify conditions under which the selection bias induced by income-differentiated mortality is higher for distribution-sensitive measures than for headcount measures. Finally, we show, on the basis of data on poverty in 11 European economies, that the size of the selection bias varies across different subclasses of FGT measures and across countries.

Common sense supports prevention policies aimed at improving survival prospects among the population. It is also widely acknowledged that an early death is a serious disadvantage, and that attention should be paid to the compensation of short-lived individuals. This paper re-examines the compatibility of those two concerns: prevention against early death and compensation for early death. We show that, under mild conditions, no social ordering on allocations can satisfy a concern for prevention and a concern for compensation. The reason is that if it is socially desirable to raise the number of survivors through prevention, it must also be, under costly prevention, desirable to deteriorate the living standards of the short-lived. We then explore two approaches to the prevention/compensation dilemma, and study the associated optimal allocation of resources.