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2016 Conference Presentation

Economics United Kingdom

6 September 2016

A capabilities approach to standard of living and disability costs in older people in the UK

Elaine Douglas, University of Stirling, United Kingdom


Standard items of material deprivation, such as having a warm winter coat or taking a holiday each year, used as a measure of standard of living may be problematic when applied to older populations. Evidence suggests that older people are less willing to state they cannot afford items or are under financial strain (Groffen, Bosma, Van Den Akker, Kempen, & Van Eijk, 2008; Grundy & Holt, 2001; McKay, 2004). Further, how ‘standard of living’ is valued is not homogenous and is likely to vary according to context and population (Coast, Kinghorn, & Mitchell, 2014) and therefore may change at different stages of life. This suggests that methods to assess standard of living that utilise prescribed measures of material deprivation, including what people can or cannot do in relation to financial affordability, are limited when evaluating the standard of living in older people. Yet, maintaining a valued standard of living is of particular importance to older people as they negotiate changes in both their financial and health resources as they age.

The objective of this study was to implement Sen’s Capabilities Approach (Sen, 1985) to standard of living to estimate older people’s disability costs in the UK, based upon a similar approach taken by Morciano, Hancock, & Pudney (2015). We aimed to broaden current evaluations of standard of living to include what older people can do (freedom of choice), rather than what they actually do (functioning). This study also aimed to tackle some of the methodological challenges associated with translating such theoretical concepts into practical, policy relevant applications.

Using data from Understanding Society and the Family Resources Survey we produced a framework of capabilities based upon older people’s values in relation to standard of living. This framework comprised five core values: Social Integration (attachment); Security; Contribution (Role); Enjoyment; and Control (Autonomy/Restriction) as developed in the ICECAP-O (Investigating Choice Experiments Capability Measure in Older Adults, Coast et al., 2008) and LSCAPE (Living Standards Capability for Elders, Breheny et al., 2013, 2014). Data items from each survey were attributed to the five core values to construct a latent variable of capability. Using a latent factor structural equation model we estimated the extra cost of disability for a representative sample of older people in the UK.

The use of Sen’s capability approach, within a framework of older people’s values, offers a broader set of outcomes for policy. For example, targeting older people’s capabilities may have a more practical application and offer a more effective means to measure the benefits from policy intervention. This approach shifts the focus of policy towards older people’s ability to attain a valued standard of living, rather than on whether they can achieve, or can afford, certain prescribed functions.

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