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Costs and benefits of home care for the elderly versus residential care: a comparison using propensity scores


A comparison of the costs of residential care and home care shows that the former is more expensive for society. However, elderly people seem to be happier in residential care. All stakeholders, except the state (and thus the taxpayer), benefit if elderly people enter residential care. This reveals that payment systems in the Netherlands contain adverse incentives stimulating entry into residential care. The research is based on surveys of older people in the Netherlands living at home and those living in residential care homes in the period 2007–2009. Propensity score matching is used to match people living at home with those living in residential care. All costs of living and health care are compared for these two groups.

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  1. Lechner [13] shows that matching a multinomial probit model is similar to matchings of multiple binomial probit models. And, thus, since the binomial probit model that explains the choice between living at home and living in a residential care home gives a good match, it is valid to not take elderly living in nursing home care into account.

  2. We tried to match people in nursing homes with those living at home, but no match was found. This confirms that living in a nursing home is not a substitute for living at home.

  3. Stata 12.1 and the program psmatch2, v.4.0.6 17 May 2012 (see [14]) was used to perform propensity score matching. This program imposes a common support by dropping treatment observations (i.e. observations from people living in residential care) whose propensity score is higher than the maximum or less than the minimum propensity score of the controls (i.e. people living at home).


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Correspondence to Lucy Kok.

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Kok, L., Berden, C. & Sadiraj, K. Costs and benefits of home care for the elderly versus residential care: a comparison using propensity scores. Eur J Health Econ 16, 119–131 (2015).

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  • Home care
  • Residential care
  • Long-term care
  • Cost–benefit analysis
  • Propensity score matching

JEL Classification

  • J14
  • D61
  • C31