Two-sided intergenerational moral hazard, long-term care insurance, and nursing home use

Research output: Journal contributionsJournal articlesResearchpeer-review

Authors

Two-sided intergenerational moral hazard occurs (i) if the parent's decision to purchase long-term care (LTC) coverage undermines the child's incentive to exert effort because the insurance protects the bequest from the cost of nursing home care, and (ii) when the parent purchases less LTC coverage, relying on child's effort to keep him out of the nursing home. However, a "net" moral hazard effect obtains only if the two players' responses to exogenous shocks fail to neutralize each other, entailing a negative relationship between child's effort and parental LTC coverage. We focus on outcomes out of equilibrium, interpreting them as a break in the relationship resulting in no informal care provided and hence high probability nursing home admission. Changes in the parent's initial wealth, LTC subsidy received, and child's expected inheritance are shown to induce "net" moral hazard, in contradistinction to changes in child's opportunity cost and share in the bequest.
Original languageEnglish
JournalJournal of Risk and Uncertainty
Volume43
Issue number1
Pages (from-to)65-80
Number of pages16
ISSN0895-5646
DOIs
Publication statusPublished - 01.08.2011

Recently viewed

Publications

  1. Economie considerations regarding the mandatory insolvency petition under german law
  2. Wohlfahrt - Wirtschaft - Caritas: der Fürsorgewissenschaftler Heinrich Weber (1888 - 1946)
  3. The Short-Run Impact of Twinning in the First Birth on Female Labor Supply in Tanzania
  4. Arbeitsraum für Erzieherinnen: Kindergarten, Kindertagesstätte, Kinderkrippe, Kinderladen.
  5. Der Einfluss sozialer Orientierungsreize auf das Fahrverhalten in Gefahrensituationen
  6. Ein unglaubliches Schriftbild, von Rechtschreibung oder Interpunktion ganz zu schweigen
  7. Living on the slopes: entrepreneurial preparedness in a context under continuous threat
  8. Institutional ownership, environmental, social, and governance performance and disclosure
  9. Internetbasierte Selbsthilfeprogramme unterstützen die Behandlung: depressive Störungen
  10. Kompetenzorientierung in der Ausbildung von Grundschullehrerinnen und Grundschullehrern
  11. Professional Service Firms, Knowledge-based Competition, and the Heterachical Organization
  12. European Psychiatric Association (EPA) guidance on quality assurance in mental healthcare
  13. Fixed-term Contracts and Wages Revisited Using Linked Employer-Employee Data from Germany
  14. Vertrag zur Gründung der Europäischen Gemeinschaft (EGV): Artikel 26 [Gemeinsamer Zolltarif]
  15. Vertrag über die Europäische Union (EUV) : Artikel 17 [Sicherheits- und Verteidigungspolitik]
  16. Die Kunst des Defensivspiels. Der Briefwechsel zwischen Hans Blumenberg und Jacob Taubes
  17. State-Building and the European Union's Fight against Corruption in the Southern Caucasus
  18. Targeted metabolomics of pellicle and saliva in children with different caries activity
  19. Naturwissenschaftliche Kompetenzen und Inklusion – Inklusion durch Kompetenzorientierung?
  20. Einleitung: Sozialpolitik als Geschlechterpolitik - Geschlechterpolitik als Sozialpolitik
  21. Exports, R&D and Productivity in German Business Services Firms: A test of the Bustos-model
  22. Electrical and Mechanical Characterization of Polymer Nanofibers for Sensor Application
  23. A cognitive mapping approach to understanding public objection to energy infrastructure
  24. Martin Saar, Die Immanenz der Macht. Politische Theorie nach Spinoza. Berlin: Suhrkamp 2013
  25. Plädoyer für eine kulturwissenschaftliche Ästhetik aus Perspektive der cultural studies
  26. A PHENOMENOGRAPHICAL STUDY OF CHILDRENS’ SPATIAL THOUGHT WHILE USING MAPS IN REAL SPACES
  27. Is there a diagrammatic impulse with Plato? ‘Quasi-diagrammatic-scenes’ in Plato’s philosophy
  28. Continous preventive diagnosis for cardiovascular diseases based on stochastic modeling
  29. Viertes Tourismus-Barcamp (22. - 23. Januar 2011) an der Kath. Universität Eichstätt-Ingolstadt
  30. Lebendiges Lernen als Wegweiser zu einer humanen Ökonomie und nachhaltigen Entwicklung
  31. The Struggle for EU Legitimacy: Public Contestation, 1950-2005, by Claudia Schrag Sternberg