Altruism and Informal Care for Dementia

Informal care is an important source of care for persons with dementia. The primary objective of this study is to explore the factors that affect the choice to provide informal care and test if altruistic attitudes change the mix of formal and informal care given to patients with dementia. Using the Aging Demographic and Memory Study dataset, we analyze how patient and caregiver characteristics affect the use of informal and formal healthcare services by dementia patients, focusing on the role of altruism. Assuming that the total care provided is an unobserved mix of informal and formal care, we use a latent class model to test if direct altruism increases the probability that informal care is included in the care plan. Greater patient need, as measured by limitations in the number of activities of daily living, and having three or more comorbid conditions decreased the probability of having only informal care, while needing supervision increased the probability of having only informal care. The direct altruism has a positive and significant marginal effect on increasing the probability of providing only informal care and decreasing the probability of being in the mix category of informal and formal category. Our model suggests that altruism in the form of caregivers’ pleasure from providing care increases the amount of informal care used. Although not socially inefficient, it does raise the cost of care as part of the cost is “spent” on caregiver’s pleasure. We find empirical evidence in support of this theoretical implication

Quality Differentials and Prices: Are Cherries Lemons?

In G. A. Akerlof's market for lemons, goods of differential qualities sell under the same standard. If no price differentials exist, then the low quality goods drive out the high quality goods. In cherry markets, heterogeneous lots of cherries sell within the same market standard. At the time of sale, buyers know only the market standard. Since different qualities sell under the same standard, the potential for lemons exists if buyers cannot identify different qualities. The authors' theoretical and empirical models suggest seller characteristics signal quality to buyers, and buyers pay premiums to firms with these characteristics. Thus, cherries are not lemons. Copyright 1991 by Blackwell Publishing Ltd.