Abstract

Joint work with Bertrand Achou, Philippe De Donder, Franca Glenzer, Minjoon Lee, and Marie-Louise Leroux

Marginal utility in long-term care may vary by whether one receives care at home or in a nursing home. Using strategic survey questions, we find that the marginal utility of spending (net of the minimum cost of care) is significantly higher when receiving care at home rather than in a nursing home. Within a quantitative life cycle model, these marginal utility differences imply a larger incentive to save and a higher valuation of subsidies when expecting to receive care at home as opposed to a nursing home. This sheds light on an efficient way to expand public long-term care subsidies.