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


  • Ameriks is from Vanguard; Caplin, Laufer, and Van Nieuwerburgh are from New York University. We thank Campbell Harvey, two anonymous referees, George Akerlof, Orazio Attanasio, Daniel Benjamin, Mariacristina De Nardi, Amy Finkelstein, Eric French, Mark Gertler, Greg Kaplan, Miles Kimball, Kathleen McGarry, Costas Meghir, John Phillips, Jim Poterba, Bob Willis, and Motohiro Yogo for helpful guidance. We especially thank Erik Hurst and Jonathan Skinner for insightful discussions at the 2006 and 2007 AEA meetings in Boston and Chicago. We also thank the participants in seminars at New York University, Princeton University, Harvard University, University of California at Berkeley, MIT, the University of Michigan, University College London, the NBER Summer Institute, and the 2010 Midwest Economics Association for comments. The views expressed herein are those of the authors rather than of their institutions.


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.