Association for Public Policy Analysis & Management

Background and Hypotheses: Caring for a person living with dementia can lead to considerable additional costs, financial or in other forms, which are likely to affect a family’s welfare. Prior research indicates that the bulk of the burden of dementia care is covered informally by individuals and family members who forgo earnings to provide care or otherwise pay out of pocket for medical and caregiving services. Substantial cross-national variation has further been identified in the breakdown of formal (i.e. state provided) and informal provision of dementia care. Though these informal costs of dementia care are well understood, the impact of dementia on a household’s standard of living remains understudied. We anticipate that those households with members experiencing dementia will require substantial additional income in order to maintain a standard of living when compared to a similar household without a person with dementia. We further hypothesize that the additional income required to achieve a standard of living will be greater in countries that provide less formal long-term care support.

Data and Method: Drawing on data from the Survey of Health Aging and Retirement in Europe (SHARE), and using advanced multivariate modelling methods, we estimate the impact of dementia on standard of living of households across fifteen OECD countries. We use the standard of living method originally designed to estimate the extra costs of living associated with physical forms of disability, applied previously by Zaidi and Burchardt (2015) and more recently by Morris and Zaidi (2018). The final analytic sample consists of 43,695 respondents across 15 OECD countries (Austria, Czech Republic, Germany, Sweden, Netherlands, Spain, Italy, France, Denmark, Belgium, Switzerland, Israel, Luxembourg, Slovenia, and Estonia). We follow Sterniczuk et al. (2015) in creating a cognitive impairment index based on three tests designed to identify those with cognitive impairments consistent with dementia: verbal fluency, immediate recall, and delayed recall. We further use two standard of living measures: whether the household reports being able to make ends meet and a material deprivation index that uses 11 items covering the failure in the affordability of basic needs and the exerience of financial difficulties.

Results: We find that a household with a member experiencing dementia requires substantially more expenses to maintain its standard of living when compared to a similar household that does not include a person with dementia (19% more income to make ends meet and 40% more income to prevent material deprivation). The estimates also vary considerably across different countries and regions of Europe. We find a statically significant correlation between countries that provide greater formal supports and a lower estimate of the impact of dementia on the standard of living. This suggests that increased formal, public support is likely to translate into an improved standard of living for households caring for a person living with dementia.