Evaluating the relationship between income, survival and loss of autonomy among older Canadians

Abstract

Evaluating the relationship between health at old age and income is key for the design of equitable public policies targeted toward the elderly. While the health economics literature studying the relationship between income and survival is abundant, the literature studying the relationship between income and the risks to become dependent is still quite scarce. Using 2016 Canadian survey data on adults aged between 50 and 70, we find that income and the (objective and subjective) probability to live to age 85 are positively related while income and the (objective and subjective) probability to suffer from ADL limitations are negatively related. We also find that while the objective probability to enter a nursing home is negatively correlated with income, the subjective probability is positively correlated with income. Our results call for important policy recommendations. Poorer individuals are those who are more likely to become dependent and as such, long-term care (LTC) public policies should primarily be targeted toward them. This would generate a double benefit: first, by reducing the expected cost of dependency for those who would have more difficulty to pay for LTC expenditures and second, by fostering redistribution and decreasing income inequalities across the elderly.