• Masaki Takahashi Specially Appointed Professor, Institute for Advanced Study, Hitotsubashi University

• Daiji Kawaguchi Professor, Graduate School of Public Policy, The University of Tokyo

This paper investigates the economic consequences of manipulation of social insurance benefits in the context of public long-term care insurance (LTCI) in Japan. We first document novel discontinuity and bunching in the distribution of health scores that determine benefit levels for LTCI. The observed distribution suggests that LTCI recipients tend to receive more generous benefits than they should because medical examiners manipulate recipients’ health score. To quantify the impact of manipulation on long-term care (LTC) expenditures, we develop partial identification and nonparametric estimation methods that allow for flexible restrictions on counterfactual distribution. Our baseline estimation indicates that the manipulation increases monthly LTC expenditures per recipient by 60.2-227.9 USD (3.7-15.5%). We also find that the lower bound on manipulation effects is robust to various restrictions.

Masaki Takahashi is a postdoctoral researcher at Hitotsubashi Institute for Advanced Studies (HIAS). His academic interests are health economics, public economics, and behavioral economics. He obtained a BA in Economics from Keio University, an MA in Economics from University at Albany, State University of New York, an MA in Economics from the University of Tokyo and a Ph. D. in Economics from the University of Tokyo.