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Health, responsibility and taxation with a fresh start

Author

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  • Aitor Calo-Blanco

    (University of A Coruna, Campus de A Coruña)

Abstract

In a model where individuals differ in both their health care needs and their lifestyle preferences, we examine the fair provision of health care when those who regret their initial decisions are granted a fresh start. By considering that each agent chooses how to allocate a given amount of resources between medical and non-medical consumption, we characterise the scheme of taxes and health treatments that maximises social preferences. These preferences allow the planner to make welfare assessments when it is acceptable to compensate agents who have changed their preferences and/or who are endowed with a bad medical disposition. We show that the optimal tax scheme does not only pay additional treatments for those who are not in a good health state, but also protectively induces agents to reduce their non-medical consumption in order to limit a possible future regret.

Suggested Citation

  • Aitor Calo-Blanco, 2017. "Health, responsibility and taxation with a fresh start," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 8(2), pages 177-199, June.
    • Handle: RePEc:spr:series:v:8:y:2017:i:2:d:10.1007_s13209-016-0153-6
    DOI: 10.1007/s13209-016-0153-6
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    References listed on IDEAS

    as
    1. VALLETTA, Giacomo, 2012. "Health, fairness and taxation," LIDAM Discussion Papers CORE 2012016, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    2. Aitor Calo-Blanco, 2016. "Fair compensation with different social concerns for forgiveness," Review of Economic Design, Springer;Society for Economic Design, vol. 20(1), pages 39-56, March.
    3. Marc Fleurbaey & François Maniquet, 2005. "Fair social orderings when agents have unequal production skills," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 24(1), pages 93-127, September.
    4. Marc Fleurbaey & François Maniquet, 2007. "Help the Low Skilled or Let the Hardworking Thrive? A Study of Fairness in Optimal Income Taxation," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 9(3), pages 467-500, June.
    5. Mark V. Pauly & Thomas G. Mcguire & Pedro P. Barros (ed.), 2011. "Handbook of Health Economics," Handbook of Health Economics, Elsevier, volume 2, number 2.
    6. Marc Fleurbaey & François Maniquet, 2006. "Fair Income Tax," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 73(1), pages 55-83.
    7. Aitor Calo-Blanco, 2014. "Fairness, freedom, and forgiveness in health care," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 43(1), pages 141-151, June.
    8. FLEURBAEY, Marc & SCHOKKAERT, Erik, 2011. "Equity in health and health care," LIDAM Discussion Papers CORE 2011026, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    9. Bossert Walter & Pattanaik Prasanta K. & Xu Yongsheng, 1994. "Ranking Opportunity Sets: An Axiomatic Approach," Journal of Economic Theory, Elsevier, vol. 63(2), pages 326-345, August.
    10. J. A. Mirrlees, 1971. "An Exploration in the Theory of Optimum Income Taxation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 38(2), pages 175-208.
    11. Fleurbaey, Marc, 2012. "Fairness, Responsibility, and Welfare," OUP Catalogue, Oxford University Press, number 9780199653591.
    12. Fleurbaey,Marc & Maniquet,François, 2011. "A Theory of Fairness and Social Welfare," Cambridge Books, Cambridge University Press, number 9780521887427, September.
    13. Diamond, Peter A, 1998. "Optimal Income Taxation: An Example with a U-Shaped Pattern of Optimal Marginal Tax Rates," American Economic Review, American Economic Association, vol. 88(1), pages 83-95, March.
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    Cited by:

    1. Aitor Calo-Blanco, 2022. "Fair income tax with endogenous productivities and a fresh start," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 20(2), pages 395-420, June.

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    More about this item

    Keywords

    Health; Lifestyle preferences; Fairness; Fresh start; Taxation;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • I10 - Health, Education, and Welfare - - Health - - - General

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