Use of an Income-Equivalence Scale to Understand Age-Related Changes in Financial Strain

Abstract

Income-equivalence scales (IES) provide distinct advantages over poverty indices to adjust family income for differences in family size, including improved specification of hypothesized causal relationships involving objective measures of economic well-being. In a novel IES application, cancer patients' out-of-pocket health costs are adjusted for differences in family income and size and, along with five other subindices, contribute to an overall index of "objective family financial stress." Age-related changes are modeled simultaneously within relationships between overall objective family financial stress and subjective patient perceptions about financial strain. Among the findings, the impact of age on one area of subjective financial strain, "difficulty paying bills," is negative and curvilinear. Regardless of adjusted out-of-pocket costs, as age advances, patients appear increasingly likely to accommodate to financial stress by reporting less difficulty paying bills. This phenomenon could serve to mask and isolate older adults who are foregoing needed yet unaffordable medical care and prescriptions.The use of income-equivalence scales (IES) to adjust family income for differences in family size is described, with a novel application to derive out-of-pocket health costs that are adjusted for family income and family size. IES provide distinct advantages over the use of poverty indices. One important empirical advantage pertains to improved specification of hypothesized functional causal relationships involving objective measures of economic well-being.Causal relationships involving social structural variables and measures of objective and subjective economic well-being will be our initial focus for discussion. This will lead to a discussion and derivation of IES, which are necessary to specify this causal relationship. Then, in a unique application of IES, out-of-pocket health costs incurred by patients with recurrent cancer are adjusted for differences in family size and income and will be incorporated into an even broader index of overall objective family financial stress. Finally, curvilinear and moderated relationships based on this overall index and adult patient age will be tested in simultaneous causal relationships to three measures, in addition to a latent construct, of "subjective patient financial strain." Social Stratification as a Description of AccommodationAccording to social stratification theory and empirical findings, the social structural features reflected by demographic variables such as sex, race, and age interact over time to reflect different degrees of restrictions or barriers over access to economic resources and opportunities. This results in greater barriers within groups that are older, female, and/or a minority (Becker, 1971;Blau, 1977;Blau & Duncan, 1967;Chiswick & O'Neill, 1977;Corcoran & Duncan, 1978;Duncan, 1968;Foner, 1975;Lloyd & Niemi, 1979;Moody, 1994;Riley, Johnson, & Foner, 1972). Disadvantaged groups are more likely to experience fixed economic situations due ...

Cumulative financial stress and strain in palliative radiation outpatients: The role of age and disability

“…Older patients accommodate more than younger patients at all OFFS levels (high, mean, low), although the extent of accommodation wanes somewhat as the level increases. Since the disability co-moderator does not predict ''Difficulty Paying Bills'' in Table I, this plot is the same as the plot derived from an earlier MIMIC model that tested age curvilinearity and age moderation only (and not co-moderation by disability) across all three strain indicators [19].…”

“…Each variable is included within an additive index of Objective Family Financial Stress (OFFS). More accurately, the variables comprise six categories or subcomposites (each expressed as a standardized z -score), which are then summed to derive the overall OFFS index [19]. These subcomposites are: The overall OFFS index reflects cumulative stress effects from the ''stress load'' across repetitive and different types of stressors [20], in which severe stress may accrue from the accumulation of residual stress, even when the patient is coping successfully with individual stressors (e.g., build-up of stress from coping with multiple hassles).…”

“…For instance, a patient may report low financial strain based on difficulty paying bills (health and non-health related), yet as a result of disability or disease progression, may perceive high financial strain based on adequacy of their health insurance and financial resources to meet future health needs. In turn, these divergent responses might lead to moderate or high financial strain based on worrying about health care expenses [19].…”

Financial Satisfaction in Old Age: A Satisfaction Paradox or a Result of Accumulated Wealth?

“…Substantial evidence shows that the relationship between financial resources (using income as the indicator) and financial satisfaction tends to be particularly weak among the elderly (Fletcher and Lorenz 1985;Francoeur 2002;George 1992;Hsieh 2001Hsieh , 2002Hsieh , 2003. In her review of US literature, George (1992) concludes that income explains only about half as much of the variance in financial satisfaction among older adults, compared to the total population.…”

“…Given these findings, social psychologists and social gerontologists seem to endorse the view that financial satisfaction among the elderly is only weakly correlated with their financial resources. Furthermore, the consensus is that high financial satisfaction among the elderly is mainly attributable to the use among the elderly of passive coping strategies, such as downward adjustment of needs, aspirations, and comparison standards (e.g., Francoeur 2002;Hsieh 2003;Fletcher 1985).…”