Altruism and long-term care insurance

Justina Klimaviciute, Pierre Pestieau and Jérôme, Schoenmaeckers ()
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Jérôme, Schoenmaeckers: Université de Liège

No 2018017, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: The aim of this paper is to analyze long-term care (LTC) insurance purchase decisions when parents expect to receive assistance from altruistic children. We first propose a simple theoretical model in which we show that the effect of children's altruism on parents' insurance decision is ambiguous and depends on a number of factors: the degree of substitutability between informal and formal care, the degree of parental altruism and the concavity of the utility functions. We then run an empirical test using data from the US, France, Spain, Germany and Israel. We find that the effect of children's altruism is negative in the US and Israel, but not significant in France, Germany and Spain, which possibly suggests that the different forces identified in the theoretical model are offsetting each other.

Keywords: long-term care insurance; altruism; informal care (search for similar items in EconPapers)
JEL-codes: D64 I13 J14 (search for similar items in EconPapers)
Date: 2018-06-11
New Economics Papers: this item is included in nep-age, nep-hea, nep-ias and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2018017

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