Dynamic modelling of long-term care decisions

TitleDynamic modelling of long-term care decisions
Publication TypeJournal Article
Year of Publication2016
AuthorsSovinsky, M, Stern, SN
JournalReview of Economics of the Household
Pagination463 - 488
Date PublishedJan-06-2016
ISSN Number1569-5239
KeywordsCaregiving, Economics, Healthcare, Older Adults

This paper describes and analyzes research on the dynamics of long-term care and the policy relevance of identifying the sources of persistence in caregiving arrangements (including the effect of dynamics on parameter estimates, implications for family welfare, parent welfare, child welfare, and cost of government programs). We discuss sources and causes of observed persistence in caregiving arrangements including inertia/state dependence (confounded by unobserved heterogeneity) 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). We also present an overview of commonly used longitudinal data sets and evaluate their relative advantages/disadvantages. We also discuss other data issues related to noisy measures of wealth and family structure. Finally, we suggest some methods to handle econometric problems such as endogeneous geography.

Short TitleRev Econ Household
Citation Key8541