Product Specificity in Public Policy Toward the Elderly

Ganesan Visvabharathy, University of Minnesota
ABSTRACT - This paper identifies three product/service areas where the elderly may be particularly disadvantaged and examines the public policy needs regarding the elderly in those areas. These are: health care, housing and social services. Important research issues in these areas are also identified.
[ to cite ]:
Ganesan Visvabharathy (1982) ,"Product Specificity in Public Policy Toward the Elderly", in NA - Advances in Consumer Research Volume 09, eds. Andrew Mitchell, Ann Abor, MI : Association for Consumer Research, Pages: 23-26.

Advances in Consumer Research Volume 9, 1982      Pages 23-26


Ganesan Visvabharathy, University of Minnesota


This paper identifies three product/service areas where the elderly may be particularly disadvantaged and examines the public policy needs regarding the elderly in those areas. These are: health care, housing and social services. Important research issues in these areas are also identified.


Bureau of the Census statistics show that there were 23.175 million elderly persons (defined here as those in the age group of 65-and-over) in the 1978 U. S. population. Although the average income of the six million households with a head 65 or over is only about three-fifths the national average, total household income is a respectable $146 billion -- or 9.1% of the total income of the U.S. population. The elderly segment of the population has been growing both in size and average income (U.S. Bureau of the Census, 1978). The elderly are among the largest spenders in the country for such items as stocks, bonds, furs and jewelry, and expensive clothing (Allan 19,1). Federal agencies spent over $100 billion (in 1972, the latest year for which data are available) on programs directed largely toward the elderly. Thus, the elderly segment receives and spends a sizeable dollar amount.

Certain unique characteristics of this segment places a substantial proportion of the segment in a disadvantaged position when procuring goods and services (Nelson, 1978). For instance, reduced mobility caused by fear of crime and poor health may reduce access to information sources and increase reliance on home or mail order sales. Physical impairments or chronic illnesses may make them susceptible to quackery promising them a return to youthful vigor.

It is the intent of this paper to identify a few product and service areas where the elderly may be particularly disadvantaged and to examine the public policy needs regarding the elderly in those areas. In the process, important research issues will also be identified.


Because of differing rates of aging among different people a person at age 65 may be more or less 'old' from a biological viewpoint. Researchers such as Vedder (1965) and Tibbets (1960) argue that the real turning point toward old age begins much earlier than 65 and hence a biological developmental approach to defining 'old' age must be adopted, as opposed to a chronological approach. Others such as Barak and Schiffman (1980) argue for a cognitive approach (such as ' feel ' age or 'look' age). However, since these constructs may be equivocal regarding operationalization, most researchers use chronological age (Atchley 1972)o Since most U.S. workers retire at 65 and since certain watershed events such as income loss, increased leisure and perhaps social disengagement are associated with retirement (which define being 'old' more than actual chronological age), the 65 year old cut-off point appears reasonable.


Several situations concerning the elderly place them in particularly disadvantageous position regarding consumption. For instance, the elderly's level of educational attainment is substantially below that of the general population (Oberlander, 1978). Although there is no direct correlation between education and "wise" consumption decisions, protective disclosures such as truth-in-lending and nutritional labeling may have less impact on a less literate consumer. Reduced incomes may limit their access to information sources such as television, newspapers or buyers' guides. Additionally, the current method of determining adequate retirement income (such as social security), based on "poverty" standard of adequacy for all without regard to the pre-retirement standard of living, deprives many elderly of a reasonable standard of living (Schulz, 1970). Limited income, physical impairments and discrimination may restrict the elderly's mobility forcing them to shop in more expensive neighborhood stores, as opposed to the discount outlets located in distant areas. Poor health restricting their mobility, thereby curtailing their access to marketplace information regarding alternative sources of goods and services, and feelings of loneliness, can be played upon by salesmen (Nelson, 1978). Negative age stereotyping in the media result in the elderly's poor self-image, which makes them highly influenceable. A review of several such product and service areas suggests that where as the elderly are particularly disadvantaged in certain specific product and service areas, one is unable to generalize this across all product and service areas. (Visvabharathy, 1981). In other words, age-related effects have been found only in some product and service areas and public policy toward the elderly must be confined to these areas.

Age-related effects have been found and public policy implications appear especially in health care, housing, and Social Services. These three areas were chosen for discussion on the basis of (a) proportion of elderly's total income spent and (b) total national investment (both public and private). Even in the areas where age-related effects could be found, one has to be cognizant of the fact that in researching the elderly, there is always the difficult problem of isolating the variance explained by age from other confounding factors such as mobility or poverty.

a. Health Care

In 1975, 30% of the national health care dollar expenditures were spent on the elderly, who make up 10% of the population. Despite the vast health care expenditures in the elderly market, there appears to be a mismatch between the health needs of older persons and the organization of resources to meet these needs. For instance, present health care systems are mainly organized to deal with acute illness, but the illnesses of old age tend to be degenerative and chronic. Unlike some other nations like Denmark, in the U.S., there is no geriatric specialty in medicine. Even the available physician services are not equally accessible to all elderly: the rural elderly have far less of an access than the national average, due to inadequate provision of services and inadequate access facilities.

Another area of concern pertaining to the health care of the elderly is nursing homes. This is a $12 billion "industry", housing over five percent of the elderly. One of the few areas where more regulation (in the form of licensing requirements) is called for in today's moot in Washington is the area of nursing homes. Representative Claude Pepper (Florida), chairman of the House Committee on Aging recently cited widespread abuses in nursing homes such as inadequate care, fraud and mismanagement. As an alternative to such institutionalization, home health care services have emerged. While possessing the advantage of more cost-effectiveness (compared to institutionalization) if delivered judiciously, abuses such as overselling of services and deceptive advertising with regard to services rendered have been reported (Lavor, 1978).

Certain aspects of medical care expenses not covered by Medicare, Medicaid or most supplemental insurance plans, such as dental care and certain portion of the drug purchases pose special problems for the elderly. For instance, despite an increased need for dental care, the utilization rate of dental services by the elderly is far below that for the rest of the population. Anderson (1976) found that most elderly would shop for drugs, if prices were advertised. Given the current restriction on price advertising, this may be an area of public policy that needs re-examination. This, however, may only be a partial solution, since doctors may refuse to prescribe a generic drug to the elderly patient.

An additional problem has been in the area of packaging, particularly packaging for drugs. Directions for usage and drug interaction precautions may have to be described in bolder print and perhaps with the use of graphic symbolism which facilitate easier processing of information. To increase readability, dark background colors and highly reflective printing (e.g., white) may have to be used. The package's opening feature (e.g., tear strip) should be clearly identified by a contrasting color (Silvenis, 1979). Since the elderly may suffer from memory and comprehension difficulties, drugs should be packaged in unit doses to fit an uniform administration schedule and packages should be designed to remind the consumer of the proper administration schedule (e.g., seven pills on a card, one for each day of the week). In addition, there is a need for drug disclosures in languages such as Spanish -- this need being greater in some parts of the country than others Pharmaceutical companies may be made to require to maintain a toll-free number for answering the elderly's drug-related questions, in view of the reading and comprehending difficulties faced by the elderly. These firms currently maintain such a service for answering physicians' questions only.

b. Housing

In spite of the fact that most elderly own their homes, increases in insurance, taxes and utility rates place considerable financial burden on them. This is because of the fact that even though most elderly are asset-rich, they are income-poor. The schemes devised by some of the cities, where some elderly are allowed to defer taxes until their death, at which time the city pays the taxes out of the equity on the sale of the property (before estate settlement) must be considered seriously by many other cities. Banks and-other financial institutions in some areas (for instance, North Carolina) offer a scheme of 'reverse annuity rollover mortgages', whereby the elderly are allowed to stay in their homes which are bought by the financial institutions. The institutions make a certain monthly payment to the elderly and upon their death, make a settlement to the homeowner's estate (Weinrobe, 1981). There is a need for clear disclosures in such agreements with regard to the number of years the elderly will receive payments and clear specification of arrangements for periods beyond the specified years, should the homeowners happen to live beyond those years (Nelson, 1978) A Similar needs exist in life care contracts.

Conversion of apartments into condominiums places special burden on the elderly because of their inability to make the downpayments. Consequently, many may have to leave the apartments, even if they had been longtime residents of the apartments. The elderly may have to be granted the right of refusal to buy in order protect their rights as tenants. Although the inconvenience of condo conversion affects not Just the elderly, but all those who are poor, significant numbers of those affected are elderly and hence the need for a policy in this area. Fraud in home repairs is another area of concern. Marlin (1978) reports instances of elderly unknowingly signing a contract deeding the home to the repair-person should the homeowner default on payment for the repair work. Again, although this could happen to any homeowner, not just the elderly, the elderly are particularly susceptible to high pressure selling. Clear and unambiguous disclosure of contract terms in nonlegalistic language is needed.

There is also a need for greater investment in housing devoted to the elderly. Compared to some of the European countries, total investment in housing devoted to the elderly in the U.S. has been meager. For instance, over 15% of all new housing units in England and Wales were devoted to the elderly in 1972, compared with less than 22 in a period of ten years (1962-72) in the U.S. (Madge, 1960). The difference in figures is significant, after adjusting for the differential numbers of the elderly in the two countries. Even the small number of units built may not be in the most desirable locations, like close to shopping and other conveniences. Private investment in housing for the elderly by way of retirement communities has benefitted only a minority of the elderly, since the elderly market is not very attractive to a profit-minded developer. Hence the need for greater public investment.

Some policy considerations in the architecture and design of houses for the elderly are also of interest. By retirement time, most elderly find themselves in oversized homes (due to the absence of children and reduced mobility) with attendant maintenance problems. An architectural solution has been suggested (Madge 1969). This is to include houses of various sizes in a planned community, so that the elderly can move to a smaller house in the same neighborhood, after retirement. Safety features in construction such as maximum use of fire-resistant materials, avoidance of fixed steps and changes in levels to reduce the effect of falls are also important. Special housing codes may be needed for persons with decreased mobility, which includes a large number of the elderly.

c. Social Services

A number of social services, particularly geared toward the elderly have emerged. These include meal services, friendly visitors, transportation services, senior centers, rehabilitative services, and information and referral services. The 1973 Comprehensive Services Amendments to the Older Americans Act provided funding for such services as meals on wheels and congregate dining. Friendly visitors provide company and 'listen' to the elderly's problems. Transportation services specially geared toward the elderly and the handicapped include specially designed vehicles and dial-a-buses. Senior centers, usually neighborhood-based, afford opportunities for socialization, communal dining and voluntary services. Rehabilitative services include physical as well as social and emotional rehabilitation. Information and referral services provide basic information and refer the elderly to requested and/or needed services and evaluate whether the elderly got the needed services and how useful they were.

Some common areas of concern for public policy can be identified with regard to these services. First of all, most of these services, in general, do not recognize the wide range of age, social, cultural and racial differences to be found within the elderly population of communities. Second, some of the services like rehabilitative services and services to the blind and hart of hearing are still biased toward the young and the potentially employable. Third, the personnel providing these services have not, for the most part, had special education and training in the field of gerontology. This is due to the fact that most professional schools do not include materials on the elderly in their curricula and consequently do not prepare students for gerontological careers. Fourth, the limited nature of transportation services available restrict the elderly's access to these services. In this respect, the rural elderly are particularly disadvantaged. Fifth, one of the main barriers to effective provision of service is the lack of co-ordination among and organizational approaches to (bring together) medical, social, environmental, and at times legal services (Beattie, 1976). Sixth, currently there is a lack of emphasis on preventive care for the elderly. Public health services should consider instituting geriatric well-clinics, similar to well-baby clinics to provide preventive services.

d. Other areas

Apart from the three areas discussed above, viz., health care, housing, and social services, a number of other areas deserve mention. These include, but are not limited to insurance, funerals and cemeteries, credit, automobile purchases and repairs, appliance repairs, and senior citizen discounts. Although several-public policy questions need to be addressed in these areas, it is the belief of the author that attention should be devoted to these areas only after some progress has been made in the three more pressing areas of health care, housing, and social services.


A number of research issues can be identified in the area of elderly consumers and public policy needs regarding she elderly. First of all, given the fact that age-specific effects could be found only in some product/service areas and not others, it is necessary to develop a reasonable taxonomy of products/services where such age-related effects can be found. Public policy geared toward the elderly must be limited to those product/service areas. In studying age-related effects, the issue of the confounding effects of other variables such as mobility or reduced income must be addressed. A methodological issue in studying age-related effects is whether the 'age' variable should be categorical or continuous. Recent research evidence (Wheatley, Chiu and Stevens, 1980) indicates that better results are obtained by using a categorical approach.

Second, what are the typical requirements of a health care system oriented toward degenerative and chronic illnesses? What type of supporting facilities such as equipment, or ambulatory care are required? Perhaps, one may find that long-term care of chronic illnesses demands more of physicians' (or perhaps, physicians' assistants') time, but do not require huge investments in equipment such as CAT scanner. Can the home health care system be expanded to at least partially serve the needs of long-term care? What special skills of the providers will be needed, in such a case?

Third, how are different segments of the elderly disadvantaged differently? In other words, how are the black and hispanic elderly disadvantaged, when compared with the white? What differences exist between men and women? Would protective disclosures in languages such as Spanish have any effect for example, in making the hispanic elderly better consumers? What are the best media for communicating with say oriental and hispanic elderly? What should be the message characteristics?

Fourth, what are the best ways of 'gerontologizing' business school curricula? A knowledge of the elderly as consumers, their special problems and needs is essential, if to-day's students are going to be to-morrow's policy-makers or even business executives who are interested in marketing products tailored to the elderly segment of the population.

Fifth, among social services, information and referral services are an important component, since they serve the function of 'gatekeeper', allowing potential entrants into the system of comprehensive social services and in view of the huge public investment in these services ($5 billion in 1972). Yet very little is known about its usage or effectiveness. Specifically, questions such as the following need attention (based on McCaslin, 1981):

What is the profile of a typical user of information and referral services? What proportion of the elderly are aware of their existence? How do different sub-groups of the elderly such as black or hispanic come to know about the existence of the services? What proportion of them are aware of the existence of the services?

What are the structural requirements of an "ideal" information and referral system? What skills should the personnel manning these services have ?

What is the relative effectiveness of different methods of provision of information and referral services, such as telephone and face-to-face in a neighborhood center setting? Does the effectiveness vary across ethnic subsegments?


This paper identified three major areas, where public policy attention regarding the elderly needs to be focused. These are health care, housing and social services. Some policy needs in each of the areas were outlined. Finally, some Important research issues regarding public policy to ward the elderlY were identified.


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