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Explaining the long-term care insurance puzzle: The role of preferences for correlation and for quality of life over wealth

Author

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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)

  • Florence Jusot

    (Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres)

  • Doriane Mignon

    (University of Manchester [Manchester], NTNU - Norwegian University of Science and Technology)

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.

Suggested Citation

  • David Crainich & Léontine Goldzahl & Florence Jusot & Doriane Mignon, 2025. "Explaining the long-term care insurance puzzle: The role of preferences for correlation and for quality of life over wealth," Post-Print hal-05360965, HAL.
    • Handle: RePEc:hal:journl:hal-05360965
    DOI: 10.1016/j.jhealeco.2025.103030
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    References listed on IDEAS

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    JEL classification:

    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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