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

Costa-Font, Joan ORCID: 0000-0001-7174-7919 and Vilaplana, Cristina (2022) Health shocks and housing downsizing: how persistent is ‘ageing in place’? Journal of Economic Behavior & Organization, 204. 490 - 508. ISSN 0167-2681

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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.

Item Type:	Article
Official URL:	https://www.sciencedirect.com/journal/journal-of-e...
Additional Information:	© 2022 The Authors
Divisions:	Health Policy
Subjects:	R Medicine > RA Public aspects of medicine > RA0421 Public health. Hygiene. Preventive Medicine H Social Sciences
JEL classification:	I - Health, Education, and Welfare > I1 - Health > I18 - Government Policy; Regulation; Public Health J - Labor and Demographic Economics > J6 - Mobility, Unemployment, and Vacancies > J61 - Geographic Labor Mobility; Immigrant Workers R - Urban, Rural, and Regional Economics > R3 - Production Analysis and Firm Location > R31 - Housing Supply and Markets
Date Deposited:	10 Oct 2022 11:27
Last Modified:	16 Nov 2024 22:36
URI:	http://eprints.lse.ac.uk/id/eprint/116941

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