Who’ll take care of Mom?

Engers, Stern.

When we are children, our parents are our caretakers, but in time many adult children find themselves taking care of their elderly parents. As thousands of baby boomers are discovering, this role reversal can have profound emotional, social and financial implications.

In a study titled “Long-Term Care & Family Bargaining,” Maxim Engers, professor of economics, and Steven M. Stern, Merrill Bank Professor of Economics, examine how families negotiate the difficult process of providing long-term care for elderly parents.

At first glance, long-term care seems a more likely subject for sociologists or psychologists. It is an emotionally charged issue that can polarize family members, causing permanent rifts among parents and siblings.

Stern and Engers’ research looks at the problem through the lens of economics. "Our paper uses economics ideas to look at something that economists don’t normally study," Stern said. So what drew him to the topic? "I was interested for two reasons," he said. "My wife was disabled, and long-term care was an issue that mattered to me personally. And then the Treasury Department asked for [research] proposals on long-term care."

Spurred by his personal and professional interests, Stern asked Engers to join him in undertaking the project. For both economists, "game theory" -- the study of how people interact and make decisions -- promised to be a useful way of interpreting the complex web of decisions surrounding long-term care of the elderly.

Discussing their methodology, Stern and Engers peppered their descriptions with game theory terms. Family members "play the game" of choosing care for an elderly parent, engage in "bargaining" with other "players," and finally achieve "equilibrium." The study assumes that all players act "rationally," which Stern defines as "doing the best that they can do for themselves given what others [in the family] are doing." If one sibling works a day job but another sibling does not, each would be acting rationally by deciding that the latter would provide daytime care for the parent.

Engers and Stern's study offers a structural model for interpreting data gathered from 4,000 elderly respondents who participated in a survey funded by the U.S. Treasury Department. This "structural" approach means that instead of simply pointing out correlations of data, Engers and Stern present a richer, more detailed analysis of family bargaining. Digging beneath the surface of the data, they provide what Stern calls "a consistent picture" of how children and their parents make crucial decisions about long-term care.

Engers and Stern's study has several implications for long-term care. First, it sends a clear message to the government policymakers that the entire family -- not just the parents themselves -- must be considered in shaping laws and subsidy programs for long-term care. The study also highlights dramatic generational shifts.

"Over the last 30 to 40 years," Stern said, "we’ve seen big changes in elderly parent care. Parents live independently for much longer" than did those in previous generations.

Finally, the study discredits two commonly held notions about long-term care. The first misconception is that oldest daughters care for their elderly parents more often than their siblings do. The data, according to Engers and Stern, no longer support that notion. Nor do the data support the conventional wisdom that adult children's employment is the main factor in deciding parental care. If anything, Stern notes, "mobility seems to be the most significant variable explaining current trends in families’ care of elderly parents."

So who benefits from the study? Lawmakers can gain insight into how their policies meet the needs of young and old alike. For families, the benefits will undoubtedly hit closer to home. Game theory shows that traditional beliefs about caring for our parents are often outmoded. As life comes full circle, the study shows a need for new approaches to caring for our elders.