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Dynamic Modelling of Long-Term Care Decisions

Michelle Sovinsky and Steven Stern ()

No 2012-019, Working Papers from Human Capital and Economic Opportunity Working Group

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).

Keywords: Long-Term Care; Dynamic Models (search for similar items in EconPapers)
JEL-codes: C51 C61 J14 (search for similar items in EconPapers)
Date: 2012-06
New Economics Papers: this item is included in nep-fdg and nep-hea
Note: FI
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http://humcap.uchicago.edu/RePEc/hka/wpaper/Sovins ... g_long-term_care.pdf First version, June, 2012 (application/pdf)

Related works:
Journal Article: Dynamic modelling of long-term care decisions (2016) Downloads
Working Paper: Dynamic modelling of long-term care decisions (2013) Downloads
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