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Do Self-insurance and Disability Insurance Prevent Consumption Loss on Disability?

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  • Steffan Ball
  • Hamish Low

Abstract

type="main" xml:id="ecca12079-abs-0001"> We show the extent to which public insurance and self-insurance mitigate the cost of health shocks that limit the ability to work. We use consumption data from the UK to estimate insurance provided by government disability programmes. Individuals with a work-limiting health condition, in receipt of disability insurance, have 9% lower consumption than those without such a condition. Self-insurance through savings and a work-active partner each improve outcomes by about 3%. Reduced generosity of disability insurance after 1995 is associated with increases in the consumption loss on disability, implying worse insurance, but with fewer false claimants, implying better targeting.

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  • Steffan Ball & Hamish Low, 2014. "Do Self-insurance and Disability Insurance Prevent Consumption Loss on Disability?," Economica, London School of Economics and Political Science, vol. 81(323), pages 468-490, July.
    • Handle: RePEc:bla:econom:v:81:y:2014:i:323:p:468-490
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    File URL: http://hdl.handle.net/10.1111/ecca.2014.81.issue-323
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    Cited by:

    1. Fadlon, Itzik & Nielsen, Torben Heien, 2019. "Household labor supply and the gains from social insurance," Journal of Public Economics, Elsevier, vol. 171(C), pages 18-28.
    2. Andreas Haller & Stefan Staubli & Josef Zweimüller, 2024. "Designing Disability Insurance Reforms: Tightening Eligibility Rules or Reducing Benefits?," Econometrica, Econometric Society, vol. 92(1), pages 79-110, January.
    3. Bruce Meyer & Wallace K. C. Mok, 2016. "Disability, Earnings, Income and Consumption," NBER Chapters, in: Social Insurance Programs (Trans-Atlantic Public Economics Seminar, TAPES), National Bureau of Economic Research, Inc.
    4. Hamish Low & Luigi Pistaferri, 2020. "Disability Insurance: Theoretical Trade‐Offs and Empirical Evidence," Fiscal Studies, John Wiley & Sons, vol. 41(1), pages 129-164, March.
    5. Kolsrud, Jonas & Landais, Camille & Spinnewijn, Johannes, 2020. "The value of registry data for consumption analysis: An application to health shocks," Journal of Public Economics, Elsevier, vol. 189(C).
    6. Chiara Dal Bianco, 2019. "Labour Supply and Welfare Effects of Disability Insurance: A Survey," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 5(1), pages 161-189, March.
    7. Hamish Low & Luigi Pistaferri, 2015. "Disability Insurance and the Dynamics of the Incentive Insurance Trade-Off," American Economic Review, American Economic Association, vol. 105(10), pages 2986-3029, October.
    8. Rennane, Stephanie, 2020. "A double safety net? Understanding interactions between disability benefits, formal assistance, and family support," Journal of Health Economics, Elsevier, vol. 69(C).
    9. Dalton, Michael & LaFave, Daniel, 2017. "Mitigating the consequences of a health condition: The role of intra- and interhousehold assistance," Journal of Health Economics, Elsevier, vol. 53(C), pages 38-52.

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