This paper reports survey evidence on long-term care (LTC) risk misperceptions and demand for long-term care insurance (LTCI) in Canada. LTC risk misperceptions is divided into three diﬀerent risks: needing help for at least one activity of daily life, needing access to a nursing home, and living to be 85 years old. We contrast subjective (i.e. stated) probabilities with actual probabilities for these three dimensions. We ﬁrst provide descriptive statistics of how objective and subjective probabilities diﬀer and correlate to each other. Second, we study cross-correlations between diﬀerent types of risks. We then study how risk misperceptions correlate with individual characteristics, and evaluate how misperceptions aﬀect intentions and actual purchase of LTCI. Our conclusions are two-fold. First, we ﬁnd that most subjects are not well informed about their individual LTC risks, making it diﬃcult for them to take the correct LTCI decisions. Second, and even though misperceptions explain an individuals actual or his intentions to take-up LTCI, misperceptions are unlikely to explain the poor take-up rate of LTCI in our sample.
Centre interuniversitaire de recherche en analyse des organisations
1130 rue Sherbrooke Ouest, suite 1400
Montréal, Québec (Canada) H3A 2M8
© 2018 CIRANO. Tous droits réservés.