For instance, in the Fletcher and Lorenz study, Blacks and nonelderly adults report lower subjective economic well-being a single measure of financial satisfaction , whereas the main-effect of sex is not statistically significant. It appears that with increasing age, respondents report higher subjective economic well-being controlling for objective economic well-being. It should be noted that although the study does test for moderation by age, it neglects age curvilinearity. Fletcher and Lorenz apply ANOVA to the large annual national probability samples each with about 1, respondents that make up the General Social Surveys from and in Their study supports the hypothesis that the linear relationship between objective economic well-being total family annual income and subjective economic well-being a single measure of financial satisfaction is weakest among the oldest age group 54 and older compared to the two younger age groups.
Because Fletcher and Lorenz categorized age and used ANOVA rather than treating age as a continuous variable within multiple regression, the curvilinear effect of age i. Furthermore, if the intercorrelation between mean-centered measures of age and income exceeds. The true effect might be the curvilinear impact of age represented by an age 2 term see MacCallum and Mar, , for an explanation.
Nevertheless, in eithercase, the accommodation hypothesis—the tendency to accommodate increasingly with age—would still be supported. Similar support is not found for the moderating effects of sex or race. However, the ranking of regression slopes from separate analyses for each of the 12 age-sex-race subgroups reveals the following:.
Note that these conclusions are valid even though the main effect of sex is insignificant and the main effect of race reveals that Blacks report lower subjective economic well-being, controlling for objective economic well-being. A plausible explanation why the main effects and moderator effects attributed to sex are statistically insignificant is that marriage and living with others each may complicate the role of sex. For respondents who are not married or who live alone, sex signifies current and future perceptions of their own financial stress and strain.
However, for respondents who are married or live with others, financial stress and strain incurred by others in the household are also likely to be reflected in many cases. It appears that marital state and household size might be more robust moderators or more robust predictors of income adequacy than sex, which may be confounded with each of these variables when they are not also included as predictors, as in the Fletcher and Lorenz study. Fletcher and Lorenz fail to discuss the weakness that objective economic well-being total family annual income is not adjusted to reflect family size.
The two younger age groups of respondents ages and are more likely to have dependent children living at home resulting in a family size adjustment that would reduce total family income. As a result, the strength of the relationship between objective economic well-being total family annual income and subjective economic well-being financial satisfaction in the two younger age groups may be overstated. However, this confounding weakness may be offset to the extent that the oldest age category reflects retirees living on fixed incomes i.
Thus, it is unclear whether a family size adjustment would significantly weaken the moderator effect of age. As discussed in the next section, total family income can be adjusted to reflect family size through the use of a specific exponential value that was derived to reflect a family IES.
Dubnoff and Vaughan , Vaughan , and Bradbury discuss very similar models for the derivation of the specific exponential value that are based on attitudinal questions concerning the family's own income, standard of living, or both. This approach is in contrast to one that queries respondents to rate the adequacy of income per se for described hypothetical families of various sizes. Dubnoff and Vaughan state,. By regressing satisfaction with current income and standard of living on income and a difference in circumstances, such as family size, we can use the resulting coefficients to find the level of income at which individuals in different circumstances will achieve the same level of satisfaction or utility.
We thus produce a true cost of living index.
The IES version of Vaughan requires the specification of two separate regression equations one for families with four members, the other for all other families in which income satisfaction is regressed on income, family size, and important covariates. Dubnoff and Vaughan list the important covariates of region, age of household head, perceived change in financial position over the previous year and over 2 years, life-cycle stage, retirement status, housing ownership, and receipt of various types of in-kind income. Here, a simplified illustration of the derivation of a family IES based on attitudinal survey data that excludes control variables will be adopted from Vaughan who subsequently derives a comprehensive formulation that includes all covariates.
Income satisfaction by families of all sizes except four family members S i can be regressed on family size FS i and income Y i: Similarly, income satisfaction by families with four members S 4 can be regressed on family size FS 4 and income Y This reveals the ratios of income where families of size i are as satisfied with their incomes as are families of size four.
Whelan and Beverly argue that although the literature concerning economic hardship strongly focuses on the effect of income, it has tended to neglect measures of poverty or deprivation, such as income adequacy. Through the simple application of an IES, income can be converted into a measure of income adequacy that reflects family size and mediates income and financial satisfaction. IES equals income divided by a denominator composed of family size raised to the. IES to specify relative objective financial stress. Francoeur manuscript under review adjusts out-of-pocket costs using the U.
IES to understand diverging perceptions of financial strain within the age-related contexts of disability and work status. It should be noted that other studies of financial stress use more crude measures of relative objective financial stress unadjusted by IES e. The poverty ratio, for instance, is based on the division of family income by the poverty line for a given family size.
Nevertheless, there is much evidence that current objective measures of income adequacy—such as poverty index levels for various family sizes based on the prices of a static and rather arbitrary bundle of necessities—are invalid approximations of income adequacy George, ; Triest, Even if this bundle of necessities could be shown to be valid during a given period, differences in consumption patterns over time and across nations limit the application of poverty indices. Thus, IES are preferred. In the empirical analysis discussed in the next section, the family size exponent.
There is evidence of strong stability over time with regard to the family size exponent. First, the national survey, Expenditures—U. Second, eight of the nine IES derived from six different data sets making up three types of direct subjective measures span a relatively narrow range from.
Once again, a comprehensive set of covariates was incorporated in both regression equations used to estimate each of these IES. Despite the excellent reliability of IES based on attitudinal survey questions, there is evidence that the exponential values are somewhat attenuated i. For example, a wealthy man may tend to compare his family with families of the same size in his wealthy social sphere rather than with families of the same size in the overall community. Although this approach may be too conservative for policy decisions, this very feature may be desirable in explanatory research.
However, even in policy applications, an important advantage is the capacity to assess the sensitivity of findings across a set of plausible IES e. Note as well that the family size exponent. As discussed in the last section, the national survey, Expenditures—U. We now introduce a unique application of this IES to adjust out-of-pocket medical expenses for differences in family size and family income, resulting in a new measure of family financial stress.
This new relative measure based on out-of-pocket costs is more appropriate than an absolute measure to reflect the extent to which out-of-pocket costs are an important component of objective family financial stress. In addition, the incorporation of economies of scale with increasing family size represents an improvement over the adjustment of out-of-pocket costs for per capita family income e. In addition to the inclusion of situations of high total out-of-pocket outlays and income losses e.
By reflecting family size and economies of scale in consumption, the IES component of this relative measure is an indicator of poverty or deprivation; it retains the focus on the family, which provides the social context that shapes the meaning of out-of-pocket costs to the patient and family. Other evidence attests that relative measures of out-of-pocket spending on health expenditures and premiums are preferable to absolute measures, for the purpose of estimating the relationship between the objective stress from out-of-pocket costs and subjective financial strain within families.
This model revealed that out-of-pocket health expenditures are highly regressive based on income: Low-income families pay 8. Even comprehensive health insurance may leave lower income families underinsured because an uncovered out-of-pocket expense constitutes a larger portion of total family income for lower income families compared to other families Farley, These patients were living at home, had recently transitioned from curative treatment into home-based palliative care, and were not deemed terminally ill. Forty-seven percent of all eligible patients agreed to participate.
Each sex made up about half of the sample, which was almost entirely Caucasian. For a description of the sample and measures, see Schulz et al. The current study is similar to the Fletcher and Lorenz study of the relationship between objective and subjective measures of economic well-being i. These objective and subjective measures of economic well-being are further incorporated into still broader, comprehensive domains.
Use of an Income-Equivalence Scale to Understand Age-Related Changes in Financial Strain
The multidimensional index of objective family financial stress incorporates not only the subindex for relative objective family financial stress due to out-of-pocket medical expenses but five additional subindices as well i. Given the extent of intercorrelation, the latent construct of subjective financial strain is necessarily a unidimensional first- or second-order factor.
Similar to the Fletcher and Lorenz hypothesis, female and older patients were hypothesized to accommodate in their financial strain responses i. That is, female and older patients were hypothesized to report lower subjective financial strain when the overall level of objective family financial stress is high i. Unlike the Fletcher and Lorenz model, terms are specified for the curvilinear impacts of objective family financial stress and age i. The interaction effects of gender were not statistically significant.
The model specifies both direct and indirect effects from predictors to the latent construct for subjective patient financial strain and to individual items loading onto this latent construct. Results are reported in Table 1. A follow-up simple slopes plot Figure 2 facilitates interpretation of these results.
The impact of age seems to lessen as the level of objective family financial stress increases i. In addition to this comprehensive model to test age moderation of overall objective family financial stress, follow-up models were estimated to detect the separate impact from each of the six subindices that make up objective family financial stress see Table 2. In these models, linear and curvilinear terms for objective family financial stress are based on the overall index, whereas the interaction term is based on age and the respective subindex. This results in a more valid follow-up test of age moderation and curvilinearity because effects due to the linear and curvilinear components of objective family financial stress are not misattributed to the interaction term.
Further, note that the curvilinear term for age age 2 remains negative and statistically significant within five of the six subindices exception: These consistent findings, in addition to consistent findings for the lower order derivative term for age, provide additional support that the negative curvilinear age effect within the initial explanatory model is genuine and robust. The negative curvilinear age effect is revealed within the simple slopes plot Figure 2. Again, these consistent findings, in addition to consistent findings for all negative lower order derivative terms, suggest that age buffers the impact of objective family financial stress and that this effect within the initial, explanatory model is genuine and robust.
We can also see the impact of the interaction term within the simple slopes plot Figure 2: At the youngest adult age of 40, the three curves for objective family financial stress intersect the y-axis within a narrow range; however at the oldest age of 84, the three curves are spread farther apart. Thus, patients affected by loss of wages or ended employment quit, retired, laid off, terminated as a result of their illness appear more apt to accommodate with age in their perceptions about difficulty paying bills, especially when they incurred lower levels of objective family financial stress.
These patients were either younger than 65 years of age or recent retirees. This implies that at lower levels of objective family financial stress, the younger the patient reporting loss of wages or employment, the greater the perceived difficulties in paying bills. At higher levels of objective family financial stress, subjective perceptions about difficulty paying bills become more similar across the span of adult ages, although accommodation may still be somewhat higher among older adults. The evidence suggests that accommodation may not only be a feature of aging but may become pronounced in the context of particular financial stressors.
Note that such stressors are not borne by any of the oldest patients—all of the patients who end a job or incur wage loss are younger than age 65 or recent retirees. The remaining two types of financial stress occur across the adult age span. That is, as patients age, they may increasingly accommodate in their perceptions about difficulties paying bills, regardless of adjusted out-of-pocket costs relative to income and family size or the diversity of tapped financial resources.
In some respects, increasing accommodation as patients age may be an important mechanism for coping with the financial strain of paying bills. This may include taking less medication than prescribed to delay the need for refills. Such older adults may incur low adjusted out-of-pocket costs relative to their income and family size, as well as low overall objective family financial stress.
Mentnech, Ross, Park, and Benner reason,. It is conceivable that lower income Medicare enrollees who lack supplemental coverage and who are neither in excellent health or very poor health may be foregoing care until their health status deteriorates further because of the out-of-pocket expense. The implication is that these enrollees may be better served by earlier intervention.
If it is true that vulnerable subgroups are foregoing care, this could become more of a problem with the pressure to contain costs in public programs. Thus, there is a need for additional research to determine how these two at-risk subgroups of older patients may differ based on socioeconomic characteristics, insurance coverage, attitudes, and hierarchy of values. Interpretations of the findings must be made cautiously, given limitations posed by the nonrandom sample, the cross-sectional data, and even the IES.
The use of cross-sectional data does not permit us to distinguish effects of aging from those due to cohort differences. In an interesting longitudinal study of trends in financial satisfaction among middle-age and older adults, an aging effect, in which financial satisfaction increases over time, is distinguished from a strong intercohort replacement effect, in which financial satisfaction is lower within younger cohorts Hsieh, However, limitations of this longitudinal study involve weaknesses in the measure of financial satisfaction and the lack of an IES that adjusts for household economies of scale with increasing family size i.
Thus, the intercohort replacement effect could be overstated. In the current study, the use of separate IES for elderly families and for families headed by younger adults would have been desired, however validity of IES is questionable when they are created solely with elderly populations based on their subjective financial perceptions.
Note, however, that this very type of invalidity within family IES created for elderly populations would appear to provide empirical evidence for the accommodation hypothesis because the elderly reach equal levels of financial satisfaction as younger adults at substantially lower levels of income, although other explanations are also possible e.
IES can be created solely on elderly populations, or any group, if the dependent variable s are objective measures rather than subjective perceptions. Jones and O'Donnell estimate separate IES to predict budget shares of fuel, transport, services, food, alcohol, clothing, and other goods. The predictors across the various estimates of IES include five disability dummy variables i.
Klavus estimates IES to predict an imputed value of outpatient care and the actual value of sickness insurance reimbursements. In the current study, the Buhmann IES does not account for chronic illness or disability, however this is not a weakness because disability is specified as a comoderator. In the prediction of difficulty paying bills, the disability moderator was not found to be statistically significant. Only age moderation and curvilinearity were statistically significant, and so this simpler model is reported.
Finally, a criticism of the use of income adequacy as a measure of economic needs refers to the lack of distinction between earned income e. Unfortunately, this is not well-reflected within national IES to date. However, as Dubnoff and Vaughan discuss, covariate s for various sources of in-kind income or for percentages of total income that is earned versus unearned should be included as important covariate s. A cogent and comprehensive review article by Bradbury discusses the following: Compared to the Fletcher and Lorenz model, the MIMIC model in the current study affords more valid testing of accommodation hypotheses because each subindex of objective family financial stress and each item of subjective patient financial strain is tested within broader, comprehensive contexts of objective family financial stress and subjective patient financial strain.
A useful illustration is derived from the literature on depression. In the case of a diagnosis of minor or major depression, symptoms of either dysphoric mood sadness or anhedonia must be present in the context of other symptoms. This permits the important distinction of dysphoria, anhedonia, or other depressive symptoms that manifest as part of episodes of minor or major depression from those that occur outside of such episodes. A MIMIC regression model permits these distinctions, which are important because depressive symptoms can be debilitating even when they occur outside the context of a diagnosis of minor or major depression.
Similarly, the measurement portion of the MIMIC model in the current study requires that all three items, or indicators, of subjective patient financial strain load onto the latent construct. This allows the joint impact when all three indicators occur together i. For instance, one patient may report high financial strain for all three indicators. Another patient may report low financial strain in terms of difficulty paying bills, yet as a result of disease progression, perceives high financial strain in terms of the adequacy of financial resources and insurance to meet future health needs; these divergent responses may lead this patient to report moderate or perhaps high financial strain in terms of worrying about finances.
Indeed, in the current study, this modeling flexibility resulted in the detection of statistically significant and negative curvilinear impacts from age to difficulty paying bills in the overall ordinal probit MIMIC model, and in all but one of the six follow-up runs to test age moderation of each subindex. In contrast, age curvilinearity was not detected within corresponding ordinal probit regressions not shown that predict difficulty paying bills without simultaneously assessing joint impacts from all three indicators of subjective patient financial strain.
The detection of age curvilinearity as indirect effects within the MIMIC models despite the lack of detection within the corresponding ordinal probit regressions strongly implies that patients do not necessarily respond consistently across all three indicators. Richard Benoit Francoeur, Ph. He received a Social Work Leadership Development Award Project on Death in America, Open Society Institute to investigate material and financial barriers that prevent adequate pain and symptom control within inner-city minorities receiving palliative care.
He was also recently awarded a 2-year research grant from the National Institute of Mental Health to investigate late-life depression masked by low sadness. Vaughan uses the same natural logarithm transformation of income as well as a natural logarithm transformation of family size. The latter natural logarithm transformation reflects that there is a smaller increment in utility or satisfaction with a given level of income as family size increases.
The log transformations of both variables serve to improve the fit R 2 of the regression equations. One reason for this ranking pattern may be that older women of either race are more likely to be widowed than older men.
Use of an Income-Equivalence Scale to Understand Age-Related Changes in Financial Strain
Therefore, older Black males might perceive higher financial inadequacy and financial strain as a result of being married, even if older Black females have lower incomes. A related reason that the moderating effects of sex or race were not statistically significant in the initial ANOVA of the entire sample data appears to be that sex and race moderate only within specific subgroup contexts involving age, race, and sex.
This serves to define medical expenses and may refresh patients' memories of expenditures. The categories of medical expenditures are doctor bills, nursing home expenses, medications, private duty or hired nurses, home health aide, special equipment and supplies, special foods or supplements, hospital bills, ambulance services, health insurance premiums, and other. Unfortunately, there are too few Blacks in our small sample for a similar ranking. Furthermore, even with a more optimal sampling of Blacks, our small sample would remain considerably underpowered to derive subgroup rankings from separate regressions on each age-race-sex subgroup.
In both studies, whatever the moderating effect of sex may be, we do know that it is not sufficiently robust to be detected outside the comoderating contexts of age and race. Some attempt to incorporate household economies of scale is reflected through the specification of a subjective or crude predictor. Hsieh accounted for the respondent's perception of family income in relation to American families in general using a 5-point scale, and Hsieh accounted for poverty status using a dummy variable.
The wording of the single-item measure of financial satisfaction may be confusing to some respondents, especially adults with less education and in the oldest cohorts.
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As a result, financial satisfaction could be understated forthese adults. Better wording for these categories would be very satisfied and either moderately satisfied or somewhat satisfied. National Center for Biotechnology Information , U. Author manuscript; available in PMC Apr Columbia University School of Social Work.
The publisher's final edited version of this article is available at Res Aging. See other articles in PMC that cite the published article. 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. Social Stratification as a Description of Accommodation According 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.
However, the ranking of regression slopes from separate analyses for each of the 12 age-sex-race subgroups reveals the following: Four of the six subgroups with the weakest coefficients include the oldest age group. Similar ranking patterns are found with one exception for the sex and race subgroups as one advances from the youngest through the oldest age categories.
A Derivation and Explanation Dubnoff and Vaughan , Vaughan , and Bradbury discuss very similar models for the derivation of the specific exponential value that are based on attitudinal questions concerning the family's own income, standard of living, or both. Dubnoff and Vaughan state, By regressing satisfaction with current income and standard of living on income and a difference in circumstances, such as family size, we can use the resulting coefficients to find the level of income at which individuals in different circumstances will achieve the same level of satisfaction or utility.
Hypotheses Similar to the Fletcher and Lorenz hypothesis, female and older patients were hypothesized to accommodate in their financial strain responses i. Open in a separate window. Lambda loadings forall three latent y indicators remain stable and acceptable. Discussion Summary and Interpretation The evidence suggests that accommodation may not only be a feature of aging but may become pronounced in the context of particular financial stressors.
Mentnech, Ross, Park, and Benner reason, It is conceivable that lower income Medicare enrollees who lack supplemental coverage and who are neither in excellent health or very poor health may be foregoing care until their health status deteriorates further because of the out-of-pocket expense. Limitations and Comparisons With Other Studies Interpretations of the findings must be made cautiously, given limitations posed by the nonrandom sample, the cross-sectional data, and even the IES. Advantages of the MIMIC Regression Model Compared to the Fletcher and Lorenz model, the MIMIC model in the current study affords more valid testing of accommodation hypotheses because each subindex of objective family financial stress and each item of subjective patient financial strain is tested within broader, comprehensive contexts of objective family financial stress and subjective patient financial strain.
Social Stratification as a Description of Accommodation
Footnotes 1 Dubnoff and Vaughan use a natural logarithm transformation of income to reflect the extensive evidence that the marginal satisfaction with income diminishes as income rises. Income distribution in OECD countries: Evidence from the Luxembourg Income Study. The status of age: The economics of discrimination. Kindle Cloud Reader Read instantly in your browser. Product details File Size: Physica; Softcover reprint of the original 1st ed.
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