Installing Elevators in Old Apartment Buildings: Is it Worth the Costs and If So: For Whom?

Abstract

The Norwegian state housing bank offers economic subsidies to stimulate instalment of elevators in existing apartment buildings in which stairway is the only passageway. The subsidy constitutes about 50 percent of the total costs of installing elevators, provided that certain conditions are met. The political motivation for this subsidy is to reduce the likelihood that residents in such apartment buildings will have to relocate if their mobility is reduced, e.g., due to old age. In this paper we study the economics of investing in elevators, both from the societal point of view and from the residents’ point of view. Elevators might enable residents to continue to live in their apartment even if their health deteriorates. Hence, installation of elevators will have both monetary and non-monetary consequences. In this study, focus is placed mainly on the monetary implications of such an investment. An elevator may reduce the likelihood that residents suffer injuries associated with falls when climbing the stairs and subsequently also affect costs associated with health and social services. Moreover, installation of an elevator may enable residents to live in their apartment for a longer period, and subsequently alter the costs of public services, among which are housing, institutions and health and social services. About 70.000 Norwegians at the age of 80 years and older live in an apartment placed on the first floor or higher of a building without elevator. It is a political ambition to enable people to age in place, and for the health and social services to be provided in the recipients’ home. In this study, we estimate the potential societal economic savings from reduced need for public living arrangements and institutions, reduced traveling and time costs associated with provision of services to elderly residents, as well as expenditures associated with falls in stairs. Also, we estimate the resident’s potential private economic benefits from investing in elevators (as measured by changes in the market price of dwellings). Our findings will shed light on whether installation of elevators in older apartment buildings is economically beneficial to the society and consequently: whether the subsidy of a yearly 4,9 million EUR is economically justifiable from the societal point of view.