NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Narrow Framing and Long-Term Care Insurance

Daniel Gottlieb, Olivia S. Mitchell

NBER Working Paper No. 21048
Issued in March 2015
NBER Program(s):The Program on Aging, The Health Care Program, The Public Economics Program

We propose a model of narrow framing in insurance and test it using data from a new module we designed and fielded in the Health and Retirement Study. We show that respondents subject to narrow framing are substantially less likely to buy long-term care insurance than average. This effect is distinct from, and much larger than, the effects of risk aversion or adverse selection, and it offers a new explanation for why people underinsure their later-life care needs.

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Document Object Identifier (DOI): 10.3386/w21048

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