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Health shocks and housing downsizing: how persistent is ‘ageing in place’?

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  • Costa-Font, Joan
  • Vilaplana, Cristina

Abstract

Individual preferences for ‘ageing in place’ (AIP) in old age are not well understood. One way to test the strength of AIP preference is to investigate the effect of health shocks on residential mobility to smaller size or value dwellings, which we refer to as 'housing downsizing'. This paper exploits more than a decade worth of longitudinal data to study older people's housing decisions across a wide range of European countries. We estimate the effect of health shocks on different proxies for housing downsizing (residential mobility, differences in home value, home value to wealth ratio), to examine the persistence of AIP preferences. Our findings suggest that consistently with the AIP hypothesis, after every decade of life, the likelihood of downsizing decreases by two percentage points (pp). However, the experience of a health shock partially reverts such culturally embedded preference for AIP by a non-negligible magnitude We estimate a 9pp increase in the probability of residential mobility after the onset of a degenerative illness), a 0.6 a fewer rooms after the onset of a degenerative illness. Such estimates are larger in northern and central European countries.

Suggested Citation

  • Costa-Font, Joan & Vilaplana, Cristina, 2022. "Health shocks and housing downsizing: how persistent is ‘ageing in place’?," LSE Research Online Documents on Economics 116941, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:116941
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    File URL: http://eprints.lse.ac.uk/116941/
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    Cited by:

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    More about this item

    Keywords

    ageing in place; housing downsizing; health shocks at old age; Europe; residential mobility; mental degenerative mental illness; mental disorder; Elsevier deal;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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