Working Paper: CEPR ID: DP9587
Authors: Philippe De Donder; Pierre Pestieau
Abstract: We study the political determination of the level of social long-term care insurance when voters also choose private insurance and saving amounts. Agents differ in income, probability of becoming dependent and of receiving family help. Social insurance redistributes across income and risk levels, while private insurance is actuarially fair.The income-to-risk ratio of agents determines whether they prefer social or private insurance. Family support crowds out the demand for both social and, especially, private insurance, as strong prospects of family help drive the demand for private insurance to zero. The availability of private insurance decreases the demand for social insurance but need not decrease its majority chosen level.
Keywords: crowding out; familism; long-term care; social insurance; voting; weak and strong prospects of family help
JEL Codes: D72; I13; J14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Family help (J12) | Demand for private insurance (G52) |
| Demand for private insurance (G52) | Preferences for social insurance (H55) |
| Availability of private insurance (G52) | Demand for social insurance (G52) |
| Income-to-risk ratio (G52) | Preferences for social insurance (H55) |
| Income-to-risk ratio (G52) | Preferences for private insurance (G52) |
| Family help (J12) | Preferences for insurance types (G52) |