Home equity commitment and long-term care insurance demand

TitleHome equity commitment and long-term care insurance demand
Publication TypeJournal Article
Year of Publication2010
AuthorsDavidoff, T
JournalJournal of Public Economics
Volume94
Issue1-2
Pagination44-49
KeywordsHealthcare, Housing
Abstract

This paper shows how home equity may substitute for long-term care insurance (LTCI). The elderly commonly hold substantial wealth in the form of home equity that is rarely spent before death, except for after moves to long-term care facilities. Absent strong bequest motives implies that marginal utility fluctuates less across health states than one would predict based on a standard model without wealth tied up in housing. Numerical examples show that this asset commitment may substantially weaken LTCI demand.

URLhttp://www.sciencedirect.com/science/article/B6V76-4XBG17Y-1/2/7454bb1f43081b6bd02fe86de4c3d416
Endnote Keywords

Health care markets/Housing

Endnote ID

25480

Citation Key7483