Costing the impact of informal care on the 50+ in the UK: A standard of living latent variable approach

presenter(s) Elizabeth Lemmon | University of Stirling


As the population continues to age there is increasing pressure on government and individuals to provide care for the elderly in society. The pressure on individuals to provide informal caring roles for family members is further amplified by recent government legislation aimed at promoting care in the community and the realisation that the elderly would like to live in their own homes for as long as possible. What’s more, as the proportion of elderly in our population increases, the number of people living with multi-morbidities also rises, further increasing the demands on family members in their roles as informal carers. It is therefore becoming increasingly important that the positive and negative impacts of providing informal care are fully understood. This understanding will help policy makers to design policy that adequately supports informal carers in their roles which will in turn ensure that the cared for are well looked after. This paper builds on the methods used by Morciano, Hanncock and Pudney (2015), and aims to estimate the monetary cost associated with being an informal carer using a novel standard of living (SoL) approach. This approach extends beyond previous methods employed in the literature in that it allows for a more holistic view of the impact of informal caring on SoL and it overcomes many of the difficulties encountered when using traditional costing methods. For example, the SoL approach circumvents the difficulties involved in accurately measuring time spent informal caring, which is an inherent problem in the majority of the costing informal care literature. Individual and household level data from the 2012/13 Family Resource Survey (FRS) are used. The FRS is an annual survey which collects detailed information on the living situations and incomes of individuals living in households across the UK. The dataset contains detailed information on the provision of informal care as well as questions on material deprivation. For the purpose of this analysis, the dataset has been constructed to contain data on all carers and non-carers aged 50+. This paper employs a latent variable structural equation model to estimate the monetary compensation which is required for an informal carer to maintain an equivalent SoL to their non-caring counterparts. Several material deprivation indicators are used to construct a continuous index of the unobserved, latent SoL. The structural model estimates the effect of caring, income and other observed individual characteristics on unobserved SoL. It is hypothesised that informal carers have a lower SoL than non-carers due to the time and resources they have to give up in order to provide informal care. The analysis in this paper will identify the extent to which informal carers’ SoL is reduced as a result of providing care. Attaching a monetary value to this reduction in SoL could indicate to policy makers the monetary amount that is needed to fully support an informal carer in their caring role.

date 5 September 2016

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