Dynamic Effects of Multimorbidity Shocks on Intrinsic Capacity Among Older Adults: Evidence from a Dynamic Fixed-Effects and Event-Study Analysis of ELSA

Background: Intrinsic capacity (IC), the composite of physical and mental capacities that a person can draw upon, is central to the World Health Organization's framework of healthy ageing. While multimorbidity is widely believed to erode IC, most existing evidence is cross-sectional and cannot separate true within-person decline from selection into multimorbidity. Methods: Using six waves (2012-13 to 2023-24) of the English Longitudinal Study of Ageing (ELSA), we constructed a standardized IC index via principal component analysis (PCA) across five WHO-defined domains (locomotion, cognition, vitality, sensory, psychological) and defined a multimorbidity shock as a within-person transition from fewer than two to two or more of seven chronic conditions. After estimating a series of fixed-effects models, including baseline, covariate-adjusted, and dynamic specifications with lagged shocks and a lagged dependent variable, we used an event-study design that was focused on the wave of onset. Results: When individual fixed effects and dynamic correction were added, the naïve cross-sectional link between multimorbidity shock and IC was positive (β = 0.357, p < 0.01), but the sign flipped (β = -0.0245, p < 0.05), indicating significant omitted-variable bias in simpler designs. A companion persistence model revealed that prolonged multimorbidity (β = -0.0712, p < 0.01) was more detrimental than onset alone (β = −0.0368, p < 0.01). Lagged shocks continued to lower IC one wave later (β = -0.0725, p < 0.01) and two waves later (β = -0.0352, p < 0.05). The event-study specification validated a persistent, non-monotonic post-onset trajectory and revealed no significant pre-trend (p = 0.58), validating the identifying parallel-trends assumption. Conclusions: The beginning of multimorbidity results in a little but statistically significant cumulative reduction in intrinsic ability that is not entirely reversible during the observation period. The need for dynamic panel methods in healthy-aging research is highlighted by the fact that naïve cross-sectional designs significantly mismeasure and can even reverse the sign of this relationship.