Long-Term Care Insurance: Information Frictions and Selection
Philippe De Donder (),
Claude Fluet (),
Marie-Louise Leroux and
Pierre-Carl Michaud ()
No 19-1034, TSE Working Papers from Toulouse School of Economics (TSE)
We conduct 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. We find that information frictions are pervasive. We measure the welfare losses associated with these three causes in a framework that also allows for selection. We show that information frictions reduce equilibrium take-up and lead to large welfare loss while selection plays little role.
Keywords: Long-term care insurance; adverse selection; stated-preference; health; insurance (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:123346
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