Long-Term Care Insurance: Information Frictions and Selection

M. Martin Boyer (), Philippe De Donder, Claude Fluet, Marie-Louise Leroux and Pierre-Carl Michaud

American Economic Journal: Economic Policy, 2020, vol. 12, issue 3, 134-69

Abstract: This paper conducts a stated-choice experiment where respondents are asked to rate various insurance products aimed to protect against financial risks associated with long-term care needs. Using exogenous variation in prices from the survey design and individual cost estimates, these stated-choice probabilities are used to predict market equilibrium for long-term care insurance. Our results are twofold. First, information frictions are pervasive. Second, measuring the welfare losses associated with frictions in a framework that also allows for selection, it is found that information frictions reduce equilibrium take-up and lead to large welfare losses, while selection plays little role.

JEL-codes: D82 D83 G22 I13 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (41)

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Working Paper: Long-Term Care Insurance: Information Frictions and Selection (2020)
Working Paper: Long-Term Care Insurance: Information Frictions and Selection (2019)
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DOI: 10.1257/pol.20180227

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