Advanced Search
MyIDEAS: Login

An Economic Analysis of Life Care


Author Info

  • Jonathan S. Feinstein

    (School of Management)

  • Edward Keating

    (Santa Monica CA Offices)

Registered author(s):


    Life care communities offer long term care to the elderly in the context of a residential community. Residents move into a life care community while still relatively young (though typically past age 65), initially occupying an independent living unit situated in a living complex similar to a retirement community. Later, when a resident requires more intensive care, she moves to an on-site nursing facility. In this paper we present an economic analysis of the life care industry. Our model includes a detailed specification of elderly couples' utility, a description of elderly morbidity and mortality experiences, and a formulation of the life care contract. Our results suggest that life care can offer considerable benefits to the elderly; in particular, we calculate that - based on the contractual terms which will be offered by a profit-maximizing life care operator - moving into a life care facility provides an elderly couple of age 65 with an expected surplus of $20,000 to $80,000 as compared with the alternative of remaining in their own home and utilizing (when necessary) a stand-alone nursing home. We also show that introducing into the model the risk of operator bankruptcy, which historically has been significant, substantially alters the equilibrium life care contract, and generates contractual terms which are quite close to those observed in practice.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL:
    Our checks indicate that this address may not be valid because: 503 Service Unavailable. If this is indeed the case, please notify ()
    Download Restriction: no

    Bibliographic Info

    Paper provided by Yale School of Management in its series Yale School of Management Working Papers with number ysm438.

    as in new window
    Date of creation: 10 Dec 2003
    Date of revision:
    Handle: RePEc:ysm:somwrk:ysm438

    Contact details of provider:
    Web page:
    More information through EDIRC

    Related research

    Keywords: Capitalization; Local Public Goods; School Quality; Discrete Choice Models; Hedonic Price Regression; Education Demand;

    This paper has been announced in the following NEP Reports:


    No references listed on IDEAS
    You can help add them by filling out this form.



    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.


    Access and download statistics


    When requesting a correction, please mention this item's handle: RePEc:ysm:somwrk:ysm438. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.