Explaining the long-term care insurance puzzle: The role of preferences for correlation and for quality of life over wealth

David Crainich, Léontine Goldzahl, Florence Jusot and Doriane Mignon

Journal of Health Economics, 2025, vol. 103, issue C

Abstract: The paper investigates the role of two demand-side determinants of long-term care insurance: correlation preference and relative preference for quality of life over wealth. We model the effect of those preferences on the joint decision to buy long-term care and long-term care insurance contract. We test the model using data from a laboratory experiment in France. While the experimental results offer only partial support for the theoretical predictions—specifically, correlation aversion does not account for over-insurance, our analysis provides evidence that correlation seeking and the relative preference for quality of life over wealth explain the limited uptake of long-term care insurance.

Keywords: Long-term care insurance demand; Laboratory experiment; Risk preference (search for similar items in EconPapers)
JEL-codes: C91 D90 I13 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jhecon:v:103:y:2025:i:c:s0167629625000657

DOI: 10.1016/j.jhealeco.2025.103030

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