Department of Medical Ethics and Health Policy

Document Type

Journal Article

Date of this Version


Publication Source

Journal of Health Economics



Start Page


Last Page





We examine whether long-term care (LTC) experience helps explain the low demand for long-term care insurance (LTCI). We test if expectations about future informal care receipt, expectations about inheritance receipt, and LTCI purchase decisions vary between individuals whose parents or in-laws have used LTC versus those who have not. We find parental use of a nursing home decreases expectations that one's children will provide informal care, consistent with the demonstration effect. Nursing home use by in-laws does not have the same impact, suggesting that individuals are responding to information gained about their own aging trajectory. Nursing home use by either a parent or in-law increases LTCI purchase probability by 0.8 percentage points, with no significant difference in response between parents' and in-laws' use. The estimated increase in purchase probability from experience with LTC is about half the previously estimated increase from tax policy-induced price decreases.

Copyright/Permission Statement

This manuscript version is made available under the CC-BY-NC-ND 4.0 license


Caregivers, Female, Home Care Services, Humans, Insurance, Long-Term Care, Male, Middle Aged, Models, Statistical, Nursing Homes, Parents, Risk Assessment, United States



Date Posted: 07 October 2019

This document has been peer reviewed.