Late-life Disability, Homeownership, Wealth and Mortality
Discussant: Helen Levy
Measurement of health status at older ages is complex. No single indicator fully captures all aspects of health. We focus on functional disability, which reflects restrictions in carrying out specific activities. We measure late-life disability using limitations with six activities of daily life (ADLs) including walking across the room, bathing, dressing, eating, getting in/out bed, and toileting and five instrumental activities of daily life (IADLs) including using telephone, managing money, taking medication, shopping for groceries, and preparing hot meal. Around 11 million Americans report difficulty with performing one or more ADLs or IADLs, and about half of this population is over the age 65. Difficulties with ADLs and IADLs increase with age, and the loss of functional capacity leads to rise in morbidity and mortality.
Findings from fixed effects models show that older homeowners are less likely to move unless they experience severe difficulties with ADLs, measured as difficulties with five or six ADLs. On the other hand, elderly needing help with two or more IADLs are more likely to move. When older households with diminished functional capacity move, they are less likely continue to be homeowners, and experience sharp drops in housing and total wealth. We did not find any increases in financial assets and non-housing wealth following the move and exit from homeownership. The decline in total wealth and increase in out-of-pocket health care expenditures generate lower bequest intentions for those who exit from homeownership. Upon leaving homeownership, there are some gains in mortality for those having difficulties with IADLs, but not for those having difficulties with ADLs. Our findings have significant implications for intergenerational wealth transfers, housing market and aging policy.