The Joy of Giving or Assisted Living?
Using Strategic Surveys to Separate Bequest and Precautionary Motives,
with John Ameriks, Andrew Caplin, and Steven Laufer,

ABSTRACT

The ``annuity puzzle", conveying the apparently low interest of retirees in longevity insurance, is central to household finance. One possible explanation for low annuitization is ``Public Care Aversion" (PCA), retiree aversion to simultaneously running out of wealth and being in need of long term care. We estimate such aversion using a survey instrument that includes hypothetical questions. In addition to finding that PCA is very significant, our estimates suggest that bequest motives spread deep into the middle class. In terms of financial design, our results indicate that the most effective way to increase take-up rates for annuities is to make special allowance for long term care expenses.