Structural Cause–Effect Network of Economic Factors in Aging-in-Place versus Institutionalization Decisions

Abstract

Population aging is increasing pressure on long-term care systems and household finances, making the decision between aging in place and institutionalization an important economic issue. However, prior studies often examine determinants in isolation and may not capture how economic factors interact within a connected system. This study applies the Decision-Making Trial and Evaluation Laboratory (DEMATEL) method to map the cause–and–effect relationships among five economic determinants of aging in place versus institutionalization: pension and retirement income adequacy, cost of formal home care services, public long-term care subsidies and insurance coverage, informal caregiver opportunity cost, and housing wealth and property liquidity. Using purposive sampling, expert judgments were collected through a pairwise influence questionnaire and aggregated to form the direct-relation matrix, followed by normalization and computation of total relations to identify prominence and cause–and–effect roles. The findings show that public long-term care subsidies and insurance coverage is the strongest causal driver (r−c = 0.79), indicating that policy financing shapes other economic conditions in the system. Housing wealth and property liquidity (0.42) and pension and retirement income adequacy (0.22) also function as cause factors. In contrast, informal caregiver opportunity cost (−1.43) is the strongest effect factor, suggesting caregiver burden is mainly a downstream outcome shaped by broader policy and financial conditions. These results highlight the importance of upstream policy and resource factors in supporting aging in place and reducing reliance on institutional care.