Abstract

http://ssrn.com/abstract=982674
 
 

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The Joy of Giving or Assisted Living? Using Strategic Surveys to Separate Public Care Aversion from Bequest Motives


John Ameriks


The Vanguard Group, Inc.

Andrew Caplin


New York University (NYU) - Department of Economics; National Bureau of Economic Research (NBER)

Steven Laufer


Federal Reserve Board

Stijn Van Nieuwerburgh


New York University Stern School of Business, Department of Finance; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

June 7, 2010

Journal of Finance, Forthcoming

Abstract:     
The "annuity puzzle", conveying the apparently low interest of retirees in longevity insurance, is central to household finance. One possible explanation for low annuitization is ``public care aversion" (PCA), retiree aversion to simultaneously running out of wealth and being in need of long term care. Another possible explanation is an intentional bequest motive. To disentangle the relative importance of PCA and bequest motive, we estimate a structural model of the retirement phase using a novel survey instrument that includes hypothetical questions. We identify PCA as very significant and bequest motives that spread deep into the middle class. Our results highlight potential interest in annuities that make special allowance for long term care expenses.

Number of Pages in PDF File: 50

Keywords: public care aversion, annuity puzzle, bequest, long-term care, survey methodology, household finance

JEL Classification: I10, D10, D91, G10

Accepted Paper Series


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Date posted: April 27, 2007 ; Last revised: June 8, 2010

Suggested Citation

Ameriks, John and Caplin, Andrew and Laufer, Steven and Van Nieuwerburgh, Stijn, The Joy of Giving or Assisted Living? Using Strategic Surveys to Separate Public Care Aversion from Bequest Motives (June 7, 2010). Journal of Finance, Forthcoming. Available at SSRN: http://ssrn.com/abstract=982674

Contact Information

John Ameriks
The Vanguard Group, Inc. ( email )
P.O. Box 2600
MS V36
Valley Forge, PA 19482-2600
United States
610-503-5676 (Phone)
Andrew Caplin
New York University (NYU) - Department of Economics ( email )
269 Mercer Street
New York, NY 10003
United States
212-998-8950 (Phone)
212-995-3932 (Fax)
HOME PAGE: http://www.econ.nyu.edu/user/caplina/
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Steven Laufer
Federal Reserve Board ( email )
20th Street and Constitution Avenue NW
Washington, DC 20551
United States
202-475-6608 (Phone)
202-728-5889 (Fax)
Stijn Van Nieuwerburgh (Contact Author)
New York University Stern School of Business, Department of Finance ( email )
44 West 4th Street
Suite 9-190
New York, NY 10012-1126
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
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