Does Home Equity Affect Decisions on Long-Term Care Insurance Purchases? Evidence From the United States

Publication Abstract

Hirth, Richard A., Yubraj Acharya, Helen Levy, and Kenneth M. Langa. Forthcoming. "Does Home Equity Affect Decisions on Long-Term Care Insurance Purchases? Evidence From the United States." Research on Aging.

The low uptake of private long-term care insurance (LTCI) by the elderly in the United States, despite visible risks, has left economists puzzled. Prior studies have hypothesized that home equity can be a substitute for LTCI and hence may partly explain the low uptake. We test this hypothesis empirically. We utilize exogenous variation in house prices at the level of the metropolitan statistical area (MSA) as an instrument for home equity for individuals residing in that MSA and data from the Health and Retirement Study. In the most robust specifications, we find no evidence that the elderly change their decision on LTCI based on variation in their home equity, and even specifications requiring stronger identification assumptions imply only small effect magnitudes. Home equity as a substitute for LTCI does not appear to be a major contributing factor to low LTCI take up.

10.1177/0164027519830078

Browse | Search | Next

PSC In The News

RSS Feed icon

Barbara Anderson comments in NYT on Federal Law that protects citizenship status data from distribution by the Census Bureau

Anderson discusses impact of Administration's ongoing pursuit of Citizenship information around the 2020 Census with Michigan Radio

Burgard correlates job insecurity higher with negative overall health and depression than the impact of job loss and regain

More News

Highlights

Colter Mitchell receives Presidential Early Career Award for Scientists and Engineers (PECASE)

Frey receives 2019 ASA Distinguished Contributions to Teaching Award

More Highlights


Connect with PSC follow PSC on Twitter Like PSC on Facebook