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

Joan Costa-Font and Cristina Vilaplana-Prieto

Journal of Economic Behavior & Organization, 2022, vol. 204, issue C, 490-508

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 physical and financial 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), and an average 0.6 fewer rooms after the onset of a degenerative illness. Such estimates are larger in Northern and Central European countries.

Keywords: Ageing in place; Housing downsizing; Health shocks at old age; Europe; Residential mobility; Mental disorder; Degenerative illness (search for similar items in EconPapers)
JEL-codes: G51 I18 J61 R31 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Health Shocks and Housing Downsizing: How Persistent Is 'Ageing in Place'? (2022)
Working Paper: Health shocks and housing downsizing: how persistent is ‘ageing in place’? (2022)
Working Paper: Health Shocks and Housing Downsizing: How Persistent Is 'Ageing in Place'? (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:204:y:2022:i:c:p:490-508

DOI: 10.1016/j.jebo.2022.10.039

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