VULNERABLE ELDERLY HOUSEHOLDS - EXPENDITURES ON NECESSITIES BY OLDER AMERICANS

Objective. This empirical study compares expenditures on necessities b y older Americans for different income categories. Methods. Cross-sect ional data utilized in this project are from the U.S. Bureau of Labor Statistics Consumer Expenditure Survey interview tapes for 1989-90. A two-stage least squares regression model is used to analyze patterns o f expenditure on necessities (food, housing, and medical care) by elde rly households. Results. Poor elderly households are found to spend th ree-fourths of total expenditures on housing, food, and health care. A nalysis indicates a sharp contrast between the poor receiving financia l assistance and nonrecipients. Welfare recipients spend more on housi ng and less on food and health care than nonrecipients. Nonrecipients appear to dissave at unsustainable rates, which makes them the most vu lnerable households. Conclusions. The findings indicate that a policy extending food stamps and financial assistance (which includes Medicai d eligibility) to poor and low-income elderly households would greatly increase their expenditures on housing and nonnecessities and decreas e their expenditures on food and health care. Policy changes in transf er programs designed to cover more elderly households less comprehensi vely would reduce the differences between welfare recipients and poor nonrecipients.