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At Home versus in a Nursing Home: Long-term Care Settings and Marginal Utility

Author

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  • Philippe de Donder

    (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CNRS - Centre National de la Recherche Scientifique)

  • Bertrand Achou

    (University of Groningen [Groningen])

  • Franca Glenzer

    (HEC Montréal - HEC Montréal)

  • Minjoon Lee

    (Carleton University)

  • Marie-Louise Leroux

    (ESG-UQAM - UQAM - Université du Québec à Montréal = University of Québec in Montréal)

Abstract

Marginal utility of financial resources when needing long-term care, and the related incentives for precautionary savings and insurance, may vary significantly by whether one receives care at home or in a nursing home. In this paper, we develop strategic survey questions to estimate those differences. All else equal, we find that the marginal utility is significantly higher when receiving care at home rather than in a nursing home. We then use these estimates within a quantitative life cycle model to evaluate the impact of the expected choice of care setting (home versus nursing home) on precautionary savings and insurance valuation. The estimated marginal utility differences imply a significant increase in the incentives to save when expecting to receive care at home. Larger incentives to self-insure also translate to a higher valuation of additional subsidies for home care than for nursing homes, shedding light on an efficient way to expand public long-term care subsidies. We also examine how the magnitude of our results quantitatively varies with the existing public long-term care subsidies

Suggested Citation

  • Philippe de Donder & Bertrand Achou & Franca Glenzer & Minjoon Lee & Marie-Louise Leroux, 2023. "At Home versus in a Nursing Home: Long-term Care Settings and Marginal Utility," Working Papers hal-04166735, HAL.
    • Handle: RePEc:hal:wpaper:hal-04166735
    Note: View the original document on HAL open archive server: https://hal.science/hal-04166735
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    References listed on IDEAS

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    Cited by:

    1. 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

    Long-term Care; Marginal Utility; Home Care; Nursing Home; Savings;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • I10 - Health, Education, and Welfare - - Health - - - General

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