Relative income and attitudes towards long-term care financing

Abstract

Understanding economic motivations underlying attitudes towards long-term care (LTC) financing alternatives is important for both public and private insurance design. This paper empirically explores for the first time, using survey data, the empirical validity of individual absolute and relative income (affluence) as explaining attitudes towards the financing of LTC in Spain in 2002, after controlling for professional, institutional and personal characteristics. We find that more affluent individuals prove to be less likely to support state responsibility for LTC after controlling for other institutional determinants and are less enthusiastic about social insurance. While attitudes towards state responsibility are negatively associated with relative income, attitudes towards social insurance and other funding alternatives are found to be driven by absolute income. Finally, evidence suggests that income-related attitudes appear to concentrate in the age group close to retirement who arguably have already saved for old age needs. © 2008 The International Association for the Study of Insurance Economics.