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Dynamic Modelling of Long-Term Care Decisions

Author Info

  • Michelle Sovinsky

    ()

    (University of Zurich)

  • Steven Stern

    ()

    (University of Virginia)

Abstract

This paper describes and analyzes research on the dynamics of long-term care and suggests directions for the literature to make progress. We discuss sources and causes of dynamics including inertia/state dependence (confounded by unobserved heterogeneity); match-speciÂ…c effects; and costs of changing caregivers. We comment on causes of dynamics including learning/human capital accumulation; burnout; and game playing. We suggest how to deal with endogenous geography; dynamics in discrete and continuous choices; and equilibrium issues (multiple equilibria, dynamic equilibria). Next, we evaluate the advantages of different potential data sources (NLTCS, PSID, AHEAD/HRS, SHARE, ELSA) and identify fiÂ…rst order data problems including noisy measures of wealth and family structure. We suggest some methods to handle econometric problems such as endogeneity (work, geography) and measurement error. Finally, we discuss potential policy implications of dynamics including the effect of dynamics on parameter estimates and direct policy implications of inertia (implications for family welfare, parent welfare, child welfare, and cost of government programs).

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File URL: http://humcap.uchicago.edu/RePEc/hka/wpaper/Sovinsky_Stern_2012_dynamic_modeling_long-term_care.pdf
File Function: First version, June, 2012
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Paper provided by Human Capital and Economic Opportunity Working Group in its series Working Papers with number 2012-019.

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Date of creation: Jun 2012
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Handle: RePEc:hka:wpaper:2012-019
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Keywords: Long-Term Care; Dynamic Models;

Other versions of this item:

Find related papers by JEL classification:
  • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
  • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
  • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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