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"Institutionalization Aversion" and the Willingness to Pay for Home Health Care

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  • Joan Costa-i-Font

Abstract

We examine the presence of a systematic preference for independent living at old age which we refer as “institutionalization aversion” (IA). Given that IA is not observable from revealed preferences, we draw on a survey experiment to elicit individuals’ willingness to pay (WTP) to avoid institutionalization (e.g., in a nursing home), using a double-bounded referendum WTP format. Our results suggest robust evidence of IA and reveal a willingness to pay of up to 16% of respondent’s (individuals over fifty-five years of age) average income. We find that estimates of the willingness to pay to avoid institutionalization (or €292 at the time of the study) exceed the amount respondents are willing to pay for home health care at old age in the event of a mild impairment (€222). WTP estimates vary with income, age and especially, respondents’ housing conditions. Finally, we test the sensitivity of our estimates to anchoring effects and ‘yea-saying’ biases.

Suggested Citation

  • Joan Costa-i-Font, 2017. ""Institutionalization Aversion" and the Willingness to Pay for Home Health Care," CESifo Working Paper Series 6703, CESifo.
  • Handle: RePEc:ces:ceswps:_6703
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    References listed on IDEAS

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    1. Joan Costa-Font & Montserrat Costa-Font, 2011. "Explaining Optimistic Old Age Disability and Longevity Expectations," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 104(3), pages 533-544, December.
    2. Joan Costa‐Font & Edward C. Norton & Luigi Siciliani & Joan Costa‐Font & Cristina Vilaplana‐Prieto, 2017. "Does the Expansion of Public Long‐Term Care Funding Affect Saving Behaviour?," Fiscal Studies, Institute for Fiscal Studies, vol. 38, pages 417-443, September.
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    11. Joan Costa-Font & David Elvira & Oscar Mascarilla-Miró, 2009. "`Ageing in Place'? Exploring Elderly People's Housing Preferences in Spain," Urban Studies, Urban Studies Journal Limited, vol. 46(2), pages 295-316, February.
    12. Engelhardt, Gary V. & Greenhalgh-Stanley, Nadia, 2010. "Home health care and the housing and living arrangements of the elderly," Journal of Urban Economics, Elsevier, vol. 67(2), pages 226-238, March.
    13. Holmes Thomas P. & Kramer Randall A., 1995. "An Independent Sample Test of Yea-Saying and Starting Point Bias in Dichotomous-Choice Contingent Valuation," Journal of Environmental Economics and Management, Elsevier, vol. 29(1), pages 121-132, July.
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    15. Charles, Kerwin Kofi & Sevak, Purvi, 2005. "Can family caregiving substitute for nursing home care?," Journal of Health Economics, Elsevier, vol. 24(6), pages 1174-1190, November.
    16. Joan Costa-Font, 2013. "Housing-related Well-being in Older People: The Impact of Environmental and Financial Influences," Urban Studies, Urban Studies Journal Limited, vol. 50(4), pages 657-673, March.
    17. Nicky J. Welton & Howard H. Z. Thom, 2015. "Value of Information," Medical Decision Making, , vol. 35(5), pages 564-566, July.
    18. Débora Godoy-Izquierdo & Raquel Lara Moreno & María Vázquez Pérez & Francisco Araque Serrano & Juan Godoy García, 2013. "Correlates of Happiness Among Older Spanish Institutionalised and Non-Institutionalised Adults," Journal of Happiness Studies, Springer, vol. 14(2), pages 389-414, April.
    19. Pauly, Mark V, 1990. "The Rational Nonpurchase of Long-term-Care Insurance," Journal of Political Economy, University of Chicago Press, vol. 98(1), pages 153-168, February.
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    Cited by:

    1. Bertrand Achou & Philippe De Donder & Franca Glenzer & Minjoon Lee & Marie-Louise Leroux, 2023. "At Home versus in a Nursing Home: Long-term Care Settings and Marginal Utility," CIRANO Working Papers 2023s-14, CIRANO.
    2. Costa-Font, Joan & Vilaplana-Prieto, Cristina, 2022. "Health shocks and housing downsizing: How persistent is ‘ageing in place’?," Journal of Economic Behavior & Organization, Elsevier, vol. 204(C), pages 490-508.
    3. Marta Pascual-Sáez & David Cantarero-Prieto & Carla Blázquez-Fernández, 2019. "Partner’s depression and quality of life among older Europeans," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 20(7), pages 1093-1101, September.
    4. Florentino Felgueroso & Angel de la Fuente & José E. Boscá & Joan Costa i Font & Rafael Doménech & Javier Ferri & José I. García Pérez & Sergi Jiménez & Diego Rodríguez & Analía Viola, 2020. "Aspectos económicos de la crisis del Covid-19. Boletín de seguimiento nº2," Studies on the Spanish Economy eee2020-14, FEDEA.
    5. Amilon, Anna & Kjær, Agnete Aslaug & Ladenburg, Jacob & Siren, Anu, 2022. "Trust in the publicly financed care system and willingness to pay for long-term care: A discrete choice experiment in Denmark," Social Science & Medicine, Elsevier, vol. 311(C).
    6. Sergi Jiménez-Martín & Analía Viola, 2020. "La asistencia residencial en España y COVID-19," Studies on the Spanish Economy eee2020-20, FEDEA.
    7. Akaichi, Faical & Costa-Font, Joan & Frank, Richard, 2020. "Uninsured by Choice? A choice experiment on long term care insurance," Journal of Economic Behavior & Organization, Elsevier, vol. 173(C), pages 422-434.
    8. Johannes Geyer & Peter Haan & Mia Teschner, 2024. "The Impact of Macroeconomic Conditions on Long-Term Care: Evidence on Prices," Discussion Papers of DIW Berlin 2096, DIW Berlin, German Institute for Economic Research.

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    More about this item

    Keywords

    institutionalisation aversion; state-dependent preferences; home health care; willingness to pay; caregiving; referendum format;
    All these keywords.

    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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