Institutionalization and subjective wellbeing in Europe: An attempt to compare private homes and nursing homes

The desire to age “in place” avoiding nursing homes (NH) seems general, and the recent COVID-19 pandemic may have encouraged it. But are people really worse off living in a nursing home than in a private home? As Böckerman et al. (2012) ask, is life really miserable in care homes? They concluded that, controlling for health and functional status, demographics and income, the Finns living in old age homes reported higher level of subjective wellbeing than those living at home. We extend their study to other European countries using data from the longitudinal Survey of Health Ageing and Retirement in Europe (SHARE), selecting those aged 65+ with at least one limitation in activity of daily living in order to reduce endogeneity issues. Those living in NH declared a lower level of life satisfaction than those living in the community. Controlling for demographics, the difference was around -8% over an average score of 6.7/10. Adding controls for the economic situation, health and disability level the negative effect becomes only 1% and non-significant. Functional status explains most of the difference in subjective well-being between NH and private homes. When health and disability controls are not introduced, living in NH reduces subjective quality of life in all of the four large regions of Europe. Once the controls are introduced, the effect remains negative only in Southern Europe where living is NH is less frequent. However the selection into nursing home may be linked to unobservable characteristics. We tackle this causality issue by using propensity score matching methods. The leads to confirm the OLS results. Cet.par. people feel worse in NH than in private homes. The differential negative effect is worse for men, for younger people, for those with more children or with a spouse. This in all regions except in Eastern Europe, which suggests some effects linked to local situations