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Altruism and long-term care insurance

Author

Listed:
  • KLIMAVICIUTE Justina,

    (Université de Liège)

  • PESTIEAU Pierre,

    (Université de Liège, CORE and Paris School of Economics)

  • SCHOENMAECKERS Jérôme,

    (Université de Liège)

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.

Suggested Citation

  • KLIMAVICIUTE Justina, & PESTIEAU Pierre, & SCHOENMAECKERS Jérôme,, 2018. "Altruism and long-term care insurance," LIDAM Discussion Papers CORE 2018017, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:2018017
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    File URL: https://sites.uclouvain.be/core/publications/coredp/coredp2018.html
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    More about this item

    Keywords

    long-term care insurance; altruism; informal care;
    All these keywords.

    JEL classification:

    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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