Felder, Stefan. (2016) How powerful is demography? The Serendipity Theorem revisited  comment on de la Croix et al. (2012). Journal of Population Economics, 29 (3). pp. 957967.
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Official URL: http://edoc.unibas.ch/53933/
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Abstract
Samuelson’s (Int Econ Rev 16(3):531538, 1975 ) serendipity theorem states that the “goldenest golden rule” steadystate equilibrium can be obtained by a competitive twoperiod overlapping generation economy with capital accumulation, provided that the optimal growth rate prevails. De la Croix et al. (J Popul Econ 25:899922, 2012 ) extended the scope of the theorem by showing that it also holds for risky lifetime. With this note, we introduce medical expenditure as a determinant of the probability of surviving to old age to prove the theorem. The original as well as all extended versions of the serendipity theorem, however, fail to prove that secondorder conditions are satisfied in general. Still, unlike De la Croix et al. (J Popul Econ 25:899922, 2012 ), we can exclude the existence of corner solutions where the probability of reaching old age is zero or one. The zero survival probability case becomes irrelevant if the option to randomize between death and life utility is taken into account. Survival with certainty is ruled out if the marginal cost of survival is increasing. Hence, the optimal survival probability represents an interior solution. Furthermore, we show for the optimal survival probability that the value of a statistical life is positive and equal to its marginal cost.
Faculties and Departments:  06 Faculty of Business and Economics 06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Health Economics (Felder) 

UniBasel Contributors:  Felder, Stefan 
Item Type:  Article, refereed 
Article Subtype:  Research Article 
Publisher:  Springer 
ISSN:  09331433 
eISSN:  14321475 
Note:  Publication type according to Uni Basel Research Database: Journal article 
Identification Number: 

Last Modified:  10 Oct 2017 09:54 
Deposited On:  10 Oct 2017 09:54 
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