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
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David Crainich: LEM - Lille économie management - UMR 9221 - UA - Université d'Artois - UCL - Université catholique de Lille - ULCO - Université du Littoral Côte d'Opale - Université de Lille - CNRS - Centre National de la Recherche Scientifique
Léontine Goldzahl: IÉSEG School Of Management [Puteaux]
Florence Jusot: LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique
Doriane Mignon: University of Manchester [Manchester], NTNU - Norwegian University of Science and Technology = Norges Teknisk-Naturvitenskapelige Universitet = Norjan teknis-luonnontieteellinen yliopisto

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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: Laboratory experiment; Long-term care insurance demand; risk preference (search for similar items in EconPapers)
Date: 2025-07-17
New Economics Papers: this item is included in nep-age, nep-exp, nep-hea and nep-rmg
Note: View the original document on HAL open archive server: https://hal.science/hal-05536893v1
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Published in Journal of Health Economics, 2025, 103, pp.103030. ⟨10.1016/j.jhealeco.2025.103030⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05536893

DOI: 10.1016/j.jhealeco.2025.103030

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