Long-term care risk misperceptions

  • Martin Boyer
  • Philippe De Donder
  • Claude Fluet
  • Marie-Louise LerouxEmail author
  • Pierre-Carl Michaud


This paper reports survey evidence on long-term care (LTC) risk misperceptions and demand for long-term care insurance (LTCI) in Canada. We study three LTC risks: needing help with at least one activity of daily living, needing access to a nursing home, and living to the age of 85. We contrast subjective (stated) probabilities with objective (predicted) probabilities for these three dimensions, and define misperceptions as the differences between them. We first provide descriptive statistics about objective and subjective probabilities. We then analyse how risk misperceptions correlate with individual characteristics and how they affect intentions and actual purchase of LTCI. We find that although misperceptions significantly affect both intention to buy LTCI and actual purchase of LTCI, they cannot explain the low take-up rate of LTCI in our sample. Correcting simultaneously the perceptions of LTC risks on the three dimensions would increase LTCI take-up by at most one percentage point.


Long-term care insurance puzzle Disability Misperceptions Subjective probability 

Supplementary material

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Supplementary material 1 (DOCX 44 kb)


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Copyright information

© The Geneva Association 2018

Authors and Affiliations

  • Martin Boyer
    • 1
  • Philippe De Donder
    • 2
  • Claude Fluet
    • 3
  • Marie-Louise Leroux
    • 4
    Email author
  • Pierre-Carl Michaud
    • 1
  1. 1.HEC MontréalMontréalCanada
  2. 2.ESG UQAMMontréalCanada
  3. 3.Université LavalMontréalCanada
  4. 4.Department of Economics, Ecole des Sciences de Gestion (ESG)University of Québec at Montréal (UQAM)MontréalCanada

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