Opting out and topping up reconsidered: informal care under uncertain altruism

Chiara Canta () and Helmuth Cremer

No 18-924, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: We study the design of public long-term care (LTC) insurance when the altruism of informal caregivers is uncertain. We consider non-linear policies where the LTC benefit depends on the level of informal care, which is assumed to be observable while children's altruism is not. The traditional topping up and opting out policies are special cases of ours. Both total and informal care should increase with the children's level of altruism. This obtains under full and asymmetric information. Social LTC, on the other hand, may be non-monotonic. Under asymmetric information, social LTC is lower than its full information level for the lowest level of altruism, while it is distorted upward for the higher level of altruism. This is explained by the need to provide incentives to highaltruism children. The implementing contract is always such that social care increases with formal care.

Keywords: Long term care; uncertain altruism; private insurance; public insurance; topping up; opting out (search for similar items in EconPapers)
JEL-codes: H2 H5 (search for similar items in EconPapers)
Date: 2018-05, Revised 2019-11
New Economics Papers: this item is included in nep-cta, nep-hea, nep-ias, nep-knm and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Opting out and topping up reconsidered: Informal care under uncertain altruism (2021)
Working Paper: Opting out and topping up reconsidered: Informal care under uncertain altruism (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:32682

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