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- Title
Incidental Bequests and the Choice to Self-Insure Late-Life Risks.
- Authors
Lockwood, Lee M.
- Abstract
Despite facing significant uncertainty about their lifespans and health care costs, most retirees do not buy annuities or long-term care insurance. In this paper, I find that retirees’ saving and insurance choices are highly inconsistent with standard life-cycle models in which people care only about their own consumption but match well models in which bequests are luxury goods. Bequest motives tend to reduce the value of insurance by reducing the opportunity cost of precautionary saving. The results suggest that bequest motives significantly increase saving and significantly decrease purchases of long-term care insurance and annuities. (JEL D14, D15, D64, G22, H55, J26)
- Subjects
UNITED States; LONG-term care insurance; RETIREMENT investments; MEDICAL care costs; HEALTH insurance; SAVINGS; RETIREES; ATTITUDE (Psychology)
- Publication
American Economic Review, 2018, Vol 108, Issue 9, p2513
- ISSN
0002-8282
- Publication type
Article
- DOI
10.1257/aer.20141651