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Journal of Finance Vol. 66 No. 2 2011

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

John Ameriks1; Andrew Caplin2,3; STEVEN LAUFER4,5; Stijn Van Nieuwerburgh

1 Vanguard University · 2 National Bureau of Economic Research · 3 New York University · 4 Federal Reserve · 5 Federal Reserve Board of Governors

open access

Abstract

The “annuity puzzle,” conveying the apparently low interest of retirees in longevity insurance, is central to household finance. Two possible explanations are “public care aversion” (PCA), retiree aversion to simultaneously running out of wealth and being in need of long‐term care, and 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 find bequest motives that spread deep into the middle class. Our results highlight potential interest in annuities that make allowance for long‐term care expenses.

DOI
10.1111/j.1540-6261.2010.01641.x
Volume
66
Issue
2
Pages
519-561
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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