Family altruistic behavior, informal and formal home care, and nursing home entry decisions

Background. Public and private decisions about nursing home entry are extremely important. Equally important are decisions about home-based informal care and formal home care. These outcomes will remain pertinent given increased life-expectancy forecasts.;This project examines the role of altruistic family behavior in formal and informal care decisions. Altruistic behavior is defined here in economic terms, such that a person is altruistic if he or she positively values another person's well being. This defines utility dependence.;Theory. This project aims to test the following hypotheses. Hypothesis 1: Family utility dependence affects the propensity for those 70 and older to receive informal (unpaid) family care. Hypothesis 2: Family utility dependence affects the propensity for those 70 and older to receive formal care (nursing home entry or paid home care).;Following neo-classical economic theory, hypotheses are formally derived assuming families care about elders' well being. The theory implies families increase either informal care levels or monetary exchange as preferences for elders' well being increase.;Methods. Longitudinal Study of Aging 1984-1990 (LSOA) data are used to examine the hypotheses. The four utility dependence measures are (1) children's distance from the elder and elder's frequency of (2) telephone, (3) mail, and (4) face-to-face contact with children. Probit models are estimated for each of the three key dependent variables: nursing home entry, formal home care, and informal care. Simultaneous trivariate probit models are also analyzed. An extension examines whether the utility dependence variables directly affect formal care outcomes.;Results. Utility dependence increases the likelihood of informal care and decreases the formal home care likelihood. Informal care and financial support increase the likelihood of formal home care while informal care decreases the chance of entering a nursing home.;Implications. Previous work could have omitted variable bias, as altruistic preferences have not been included and are associated with informal and formal home care decisions. Informal care influences different formal care decisions differently, complementing home care and substituting for nursing home use. The trivariate probit has advantages over previous approaches. Complex long-term care decision-making extends beyond patients, to their children.