Private health expenditures and environmental quality

This paper presents a simple two-period overlapping generations model that contains environmental and health issues. It investigates an intergenerational conflict between old and young generations as regards two defensive expenditures offsetting the influence of a worsening environment represented here by health care and environmental investment. Workers support environmental maintenance while retirees prefer investing in health care. The authors have shown that an increasing support for private health expenditure leads to a higher level of capital accumulation and leads also to a higher level of environmental quality if the maintenance efforts are higher than consumption externalities.