• Skip to primary navigation
  • Skip to content
  • Skip to primary sidebar

IZA Newsroom

IZA – Institute of Labor Economics

  • Home
  • Archive
  • Press Lounge
  • DE
  • EN
ResearchMay 30, 2018

Informal care givers pay a high price in well-being

© iStockphoto.com/PeopleImages

Population ageing is putting large pressure on public health and pension systems in most Western countries, and so policymakers are increasingly searching for ways to cut costs. Some of the reforms have resulted in larger burdens especially for poorer individuals and households that cannot afford private insurance.

A prominent example is the “outsourcing” of care for elderly and disabled people, relying on informal care provided by relatives. In England and Wales, about 5.8 million people are estimated to provide some level of unpaid care, with a strong increase in “round-the-clock” informal care over the last decade.

The costs for the voluntary care givers are hard to measure, as they not only consist of financial burdens through foregone labor market opportunities, and additional expenditure on heating and medical supplies, but also include emotional burdens, deteriorating personal relationships, and adverse effects on caregivers’ physical and mental health.

To estimate the actual comprehensive “shadow price” of informal care giving, Rebecca McDonald (University of Birmingham) and Nattavudh Powdthavee (Warwick Business School and IZA) use the so-called well-being valuation method, which is used to monetize many different occurrences in life that have no obvious market values.

Applying this method to survey questions about informal care giving and life satisfaction in the UK, the authors seek to discover how much additional income would be required to generate a well-being gain that resembles the loss of well-being through the informal care giving, over and above that of the shock and empathy of having a family member going through a serious accident in the past year.

The results suggest that more than 100,000 GBP of additional income per year would be needed on average to just compensate for the well-being losses from providing informal care to a relative who suddenly required informal care through an accident. This large number should caution policymakers that “cost-saving” decisions may carry high societal costs.

Featured Paper:

IZA Discussion Paper No. 11545 The Shadow Prices of Voluntary Caregiving: Using Panel Data of Well-Being to Estimate the Cost of Informal Care Rebecca McDonald, Nattavudh Powdthavee

Share this article

Share on X Share on Facebook Share on LinkedIn Share via e-mail
  • caregiving
  • disability
  • elderly
  • family
  • informal care
  • shadow price
  • UK
  • valuation
  • well-being
  • Nattavudh Powdthavee
  • Rebecca McDonald
Previous Post
Shuffle
Next Post

Reader Interactions

Primary Sidebar

Recent Posts

  • May 5, 2025

    Brexit’s hidden cost: Higher patient mortality in NHS hospitals
  • April 29, 2025

    How community networks shape elections after a crisis
  • March 27, 2025

    How do future elites view inequality?

Related Content

  • December 28, 2015

    Subsidized high-quality early care improves child development especially among children in low-income families
  • June 14, 2019

    Exposure to "high-achieving" boys in high school may harm girls in the long run
  • December 19, 2019

    Are women more willing to accept jobs with lower pay?
  • 
  • 
  • Archive
  • 
  • Research
  • 
  • Informal care givers pay a high price in well-being

© 2013–2025 Deutsche Post STIFTUNGImprint | Privacy PolicyIZA