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: 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
Doriane Mignon: University of Manchester [Manchester], NTNU - Norwegian University of Science and Technology

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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.

Date: 2025-09
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Published in Journal of Health Economics, 2025, 103, pp.103030. ⟨10.1016/j.jhealeco.2025.103030⟩

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Journal Article: Explaining the long-term care insurance puzzle: The role of preferences for correlation and for quality of life over wealth (2025)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05360965

DOI: 10.1016/j.jhealeco.2025.103030

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