Health spending obviously increase with capital per worker. This
paper derives the optimal accumulation policy in such a context.
The optimal accumulation rule depends on whether health spending
improve consumption enjoyment, and on whether the planner adheres
to an instantaneous welfarist view or to a complete life view.
First, when the only role of health is to enhance longevity, we
show that the capital per worker maximizing steady-state
consumption per head is inferior to the standard Golden Rule.
Moreover, the capital per worker maximizing steady-state
consumption per head, when consumption efficiency depends on the
health status, tends to exceed the optimal capital level under
purely longevity-enhancing spending. Finally, when the planner
adheres to a complete life view, the capital per worker maximizing
steady-state expected lifetime consumption per head exceeds the
optimal capital per worker under the instantaneous view.