AbstractThe enormous economic burden of dementia in the United States of America falls disproportionately on families coping with this devastating disease. Black Americans, who are at greater risk of developing dementia than white Americans, hold on average less than one-eighth of the wealth of white Americans. This study explores whether dementia exacerbates this wealth disparity by examining dementia's effect on wealth trajectories of black versus non-black Americans over an eight-year period preceding death, using five waves of data (beginning in 2002 or 2004) on decedents in the 2012 and 2014 waves of the Health and Retirement Study (N = 2,429). Dementia is associated with a loss of 97 per cent of wealth among black Americans, compared with 42 per cent among non-black Americans, while wealth loss among black and non-black Americans without dementia did not differ substantially (15% versus 19%). Dementia appears to increase the probability of wealth exhaustion among both black and non-black Americans, although the estimate is no longer significant after adjusting for all covariates (for blacks, odds ratio (OR) = 2.04, 95% confidence interval (CI) = 0.83, 5.00; for non-blacks, OR = 1.47, 95% CI = 0.95, 2.27). Dementia has a negative association with home-ownership, and the loss or sale of a home may play a mediating role in the exhaustion of wealth among black Americans with dementia.
Borrowing Constraints, Home Ownership and Housing Choice: Evidence from Intra‐Family Wealth Transfers