The Opportunity Costs of Informal Elder-Care in the United States

New Estimates from the American Time Use Survey

Published in: HSR, Health Services Research, v. 50, no. 3, June 2015, p. 871-882

Posted on RAND.org on January 01, 2014

by Amalavoyal V. Chari, John Engberg, Kristin Ray, Ateev Mehrotra

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Research Questions

  1. How much time do people spend caring for elderly relatives and friends each year in the United States?
  2. What is the monetary value—measured in forgone wages—of the time that family and friends spend caring for the elderly?

OBJECTIVES: To provide nationally representative estimates of the opportunity costs of informal elder-care in the United States. DATA SOURCES: Data from the 2011 and 2012 American Time Use Survey. STUDY DESIGN: Wage is used as the measure of an individual's value of time (opportunity cost), with wages being imputed for nonworking individuals using a selection-corrected regression methodology. PRINCIPAL FINDINGS: The total opportunity costs of informal elder-care amount to $522 billion annually, while the costs of replacing this care by unskilled and skilled paid care are $221 billion and $642 billion, respectively. CONCLUSIONS: Informal caregiving remains a significant phenomenon in the United States with a high opportunity cost, although it remains more economical (in the aggregate) than skilled paid care.

Key Findings

  • Informal (unpaid) caregiving by family members and friends is the primary source of long-term eldercare in the United States.
  • Family members and friends spend an estimated 30 billion hours each year caring for the elderly.
  • The annual cost of this informal caregiving—measured by estimating income lost during the time that unpaid caregivers spend on eldercare—is $522 billion.
  • Replacing informal care with unskilled paid care at minimum wage would cost $221 billion a year; replacing it with skilled nursing care would cost $642 billion a year.
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