Pay less, consume more? Estimating the price elasticity of demand for home care services of the disabled elderly

Quitterie Roquebert (1) , Marianne Tenand (2, 3)

1 UP1 - Université Paris 1 Panthéon-Sorbonne
2 PSE - Paris-Jourdan Sciences Economiques
3 PSE - Paris School of Economics

Although the consumption of home care is increasing with population ageing, little is known about its price sensitivity. This paper estimates the price elasticity of the demand for home care of the disabled elderly, using the French home care subsidy program ("APA"). We use an original dataset collected from a French District Council with administrative records of APA out-of-pocket payments and home care consumption. Identification primarily relies on inter-individual variations in producer prices. We use the unequal spatial distribution of producers to address the potential price endogeneity arising from non-random selection into a producer. Our results point to a price elasticity around -0.4: a 10% increase in the out-of-pocket price is predicted to lower consumption by 4%, or 37 minutes per month for the median consumer. Copayment rates thus matter for allocative and dynamic efficiencies, while the generosity of home care subsidies also entails redistributive effects.

Mots clés: Long-term Care; Price elasticity; Public policies; Disabled elderly; Censored regression

Mots clés: Dépendance chez la personne âgée; Elasticité-prix; Politiques publiques; Régression censurée

Domaines: Economies et finances

Quitterie Roquebert, Marianne Tenand. Pay less, consume more? Estimating the price elasticity of demand for home care services of the disabled elderly. 2016. ⟨hal-01385678v1⟩