Compensating the Dead
39 Pages Posted: 8 Dec 2011
Date Written: December 5, 2011
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 longevity, we show how a specific social criterion can be derived from intuitive principles, and we study the corresponding optimal policy under various informational assumptions.
Keywords: Compensation, Longevity, Mortality, Fairness, Redistribution
JEL Classification: D63, D71, I18, J18
Suggested Citation: Suggested Citation