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Abstract

Narrow Framing and Long-Term Care Insurance
Daniel Gottlieb and Olivia S. Mitchell
WP 2015-321

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 under insure their later-life care needs.

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