The Long-Term-Care Insurance Puzzle : Modeling and Measurement
John Ameriks, Joseph Briggs, Andrew Caplin, Matthew D. Shapiro, Christopher Tonetti
Individuals face significant late-in-life risks, prominently including the need for long-term care (LTC). Yet, they hold little long-term care insurance (LTCI). In this paper we use a structural model and a purpose-designed dataset to understand the determinants of insurance demand. We distinguish between a fundamental lack of desire to insure, crowd out from existing insurance, and unmet demand due to poor products available in the market. The model features individual-specific non-homothetic health-state-dependent preferences over normal consumption, consumption when in need of long-term care, and bequests, which are estimated using strategic survey questions. To account for differences between the modeled and measured insurance products, we study not only individuals' holdings of LTCI, but also their stated demand for an idealized product that mirrors that in the model. We find that many individuals would purchase LTCI and receive a large consumer surplus if it were a better product, while many others do not want to purchase even high-quality actuarially fair LTCI due to the values of their heterogeneous state-dependent preferences, their demographics, and their financial situation
Year of publication: |
October 2016
|
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Authors: | Ameriks, John |
Other Persons: | Caplin, Andrew (contributor) ; Tonetti, Christopher (contributor) ; Briggs, Joseph (contributor) ; Shapiro, Matthew D. (contributor) |
Institutions: | National Bureau of Economic Research (contributor) |
Publisher: |
Cambridge, Mass : National Bureau of Economic Research |
Saved in:
freely available
Extent: | 1 Online-Ressource |
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Series: | NBER working paper series ; no. w22726 |
Type of publication: | Book / Working Paper |
Language: | English |
Notes: | Mode of access: World Wide Web System requirements: Adobe [Acrobat] Reader required for PDF files Hardcopy version available to institutional subscribers. |
Other identifiers: | 10.3386/w22726 [DOI] |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10012455954
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