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

Joan Costa-Font and Cristina Vilaplana

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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.

Keywords: ageing in place; housing downsizing; health shocks at old age; Europe; residential mobility; mental degenerative mental illness; mental disorder (search for similar items in EconPapers)
JEL-codes: I18 J61 R31 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2022-12-01
New Economics Papers: this item is included in nep-age, nep-hea and nep-ure
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Citations: View citations in EconPapers (1)

Published in Journal of Economic Behavior & Organization, 1, December, 2022, 204, pp. 490 - 508. ISSN: 0167-2681

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http://eprints.lse.ac.uk/116941/ Open access version. (application/pdf)

Related works:
Journal Article: 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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