Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/172979
Authors: 
Costa-i-Font, Joan
Year of Publication: 
2017
Series/Report no.: 
CESifo Working Paper 6703
Abstract: 
We examine the presence of a systematic preference for independent living at old age which we refer as “institutionalization aversion” (IA). Given that IA is not observable from revealed preferences, we draw on a survey experiment to elicit individuals’ willingness to pay (WTP) to avoid institutionalization (e.g., in a nursing home), using a double-bounded referendum WTP format. Our results suggest robust evidence of IA and reveal a willingness to pay of up to 16% of respondent’s (individuals over fifty-five years of age) average income. We find that estimates of the willingness to pay to avoid institutionalization (or €292 at the time of the study) exceed the amount respondents are willing to pay for home health care at old age in the event of a mild impairment (€222). WTP estimates vary with income, age and especially, respondents’ housing conditions. Finally, we test the sensitivity of our estimates to anchoring effects and ‘yea-saying’ biases.
Subjects: 
institutionalisation aversion
state-dependent preferences
home health care
willingness to pay
caregiving
referendum format
JEL: 
R21
I18
Document Type: 
Working Paper

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