The Joy of Giving or Assisted Living? Using Strategic Surveys to Separate Public Care Aversion from Bequest Motives

The "annuity puzzle," conveying the apparently low interest of retirees in longevity insurance, is central to household finance. Two possible explanations are "public care aversion" (PCA), retiree aversion to simultaneously running out of wealth and being in need of long-term care, and an intentional bequest motive. To disentangle the relative importance of PCA and bequest motive, we estimate a structural model of the retirement phase using a novel survey instrument that includes hypothetical questions. We identify PCA as very significant and find bequest motives that spread deep into the middle class. Our results highlight potential interest in annuities that make allowance for long-term care expenses.