Elderly Parents' Expectations and Realizations of Informal Care from Adult Children: An Economic Perspective

Over the next 50 years, the U.S. will see a tremendous growth in the elderly population due to the aging baby boomers and rising life expectancies. Currently, forty-five percent of seniors need assistance with activities of daily living. Medicare and Medicaid provide little coverage for these services, leaving the elderly to rely on informal care. While previous research has examined who provides care and the process by which children and parents arrange care, I use the Study of Assets and Health Dynamics among the Oldest Old (AHEAD) to examine parents' expectations about future care from children and the implications of those predictions after the onset of a disability. Using a probit framework, I examine who anticipates care from children among non-disabled households and who actually receives care among disabled households. The household characteristics correlated with anticipating future care differ from those correlated with the true probability of receiving care. For example, an additional daughter increases the probability that an elderly household expects future care, however an additional daughter is not statistically significantly related to the true probability of receiving care. Conversely, parents' socioeconomic status is not statistically significantly related to the probability of expecting future care, but lower socioeconomic households are more likely to receive care. I directly evaluate the accuracy of parents' predictions using the panel nature of the data. Among households that expect future care from children, over 60 percent do not receive care after the initial onset of a disability and nearly 50 percent still do not receive care after living with disabilities for five years. Among households that do not anticipate care from children, approximately 25 percent unexpectedly receive care after the initial onset of a disability, while slightly more than 50 percent receive care after needing help for five years. Further analysis reveals that inaccurately predicting care from children is associated with some economic and psychological costs, whereas unexpectedly receiving care is correlated with some economic and psychological benefits