Herod Strategy and a Social Insurance Scheme Against a Short Life: Three Challenges

Abstract A social insurance scheme against a short life seems impossible: ex ante (before lengths of life are known), it is hard to identify the persons who will be short-lived, and ex post (once lengths of life are known), it is often too late to compensate the short-lived. However, it is possible to insure persons against a short life by means of age-based statistical discrimination that favours the young in line with the Herod strategy: allocating the good things of life to all young adults improves the situation of the unidentified persons who will die prematurely and reduces the deprivation due to an early death. This article examines three challenges questioning the capacity of the Herod strategy to reduce wellbeing deprivation due to a premature death. First, the limited substitutability between the quantity and the quality of life years makes an efficient insurance scheme against a short life incomplete. Second, the state cannot know ex ante the conception of the good life of the short-lived and must offer baskets of universal means that would improve all kinds of short lives. Such baskets will, under endowment effects, affect the adopted views about the good life, against the ideal of a neutral state. Third, the bias towards the future makes persons spontaneously reallocate the good things of life to later ages, which would defeat insurance against a short life.