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Long-Term Care Insurance : Information Frictions and Selection

Boyer, Martin, De Donder, Philippe, Fluet, Claude, Leroux, Marie-Louise and Michaud, Pierre-Carl (2020) Long-Term Care Insurance : Information Frictions and Selection. American Economic Journal: Economic Policy, 12 (3). pp. 134-169.

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This paper conducts a stated-choice experiment where respondents are asked to rate various insurance products aimed to protect against nancial 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.

Item Type: Article
Language: English
Date: August 2020
Refereed: Yes
Uncontrolled Keywords: Long-term care insurance,adverse selection , stated-preference, health, insurance
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 13 Nov 2019 10:41
Last Modified: 03 Sep 2020 15:51
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