Narrow framing and long-term care insurance
Gottlieb, D.
& Mitchell, O. S.
(2019).
Narrow framing and long-term care insurance.
Journal of Risk and Insurance,
1-33.
https://doi.org/10.1111/jori.12290
& Mitchell, O. S.
(2019).
Narrow framing and long-term care insurance.
Journal of Risk and Insurance,
1-33.
https://doi.org/10.1111/jori.12290
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 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.