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Health Shocks and Housing Downsizing: How Persistent Is 'Ageing in Place'?

Author

Listed:
  • Joan Costa-i-Font
  • Cristina Vilaplana-Prieto
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 the probability of different proxies for housing downsizing (residential mobility, differences in home value, home value to wealth ratio), considering the potential endogeneity of the health shock to examine the persistence of AIP preferences. Our findings suggest that consistently with the AIP hypothesis, 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 on residential mobility (9pp increase after the onset of a degenerative illness, 9.3pp for other mental disorders and 6.5pp for ADL), home value to wealth ratio and the new dwelling’s size (0.6 and 1.2 fewer rooms after the onset of a degenerative illness or a mental disorder). Such estimates are larger in northern and central European countries.

Suggested Citation

  • Joan Costa-i-Font & Cristina Vilaplana-Prieto, 2022. "Health Shocks and Housing Downsizing: How Persistent Is 'Ageing in Place'?," CESifo Working Paper Series 10022, CESifo.
    • Handle: RePEc:ces:ceswps:_10022
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    References listed on IDEAS

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    Cited by:

    1. Rapp, Thomas & Jena, Anupam B. & Costa-Font, Joan & Grabowski, David C., 2023. "Caregiving across generations: Do older adults with more grandchildren get another bite at the “sandwich” generation?," Social Science & Medicine, Elsevier, vol. 334(C).

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    More about this item

    Keywords

    ageing in place; housing downsizing; health shocks at old age; Europe; residential mobility; mental degenerative mental illness; mental disorder;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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