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The Effect of Lower Transaction Costs on Social Security Disability Insurance Application Rates and Participation

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  • Andrew Foote
  • Michel Grosz
  • Stephanie Rennane

Abstract

Transaction costs pose significant barriers to participation in public programs. We analyze how Social Security Disability Insurance (SSDI) application behavior was affected by iClaim, a 2009 innovation that streamlined the online application process. We use a difference‐in‐differences design to compare application rates before and after 2009 across counties with varying degrees of access to high‐speed internet. We estimate that counties with internet connectivity one standard‐deviation above the mean experienced a 1.6 percent increase in SSDI applications, and a 2.8 percent increase in appeals after the reform. We estimate that the increase in applications due to iClaim can explain 15 percent of the overall increase in applications between 2008 and 2011. Higher exposure to the online application led to a slightly larger increase in SSDI awards, meaning there was a small but significant increase in the overall award rate. Application rates increased the most in rural areas, while appeals and awards had more significant increases in urban areas. These results suggest that the online application reduced transaction costs to applicants, and the lower costs improved the overall targeting efficiency of the application process.

Suggested Citation

  • Andrew Foote & Michel Grosz & Stephanie Rennane, 2019. "The Effect of Lower Transaction Costs on Social Security Disability Insurance Application Rates and Participation," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 38(1), pages 99-123, January.
    • Handle: RePEc:wly:jpamgt:v:38:y:2019:i:1:p:99-123
    DOI: 10.1002/pam.22095
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    Cited by:

    1. Gopi Shah Goda & Emilie Jackson & Lauren Hersch Nicholas & Sarah See Stith, 2023. "The impact of Covid-19 on older workers’ employment and Social Security spillovers," Journal of Population Economics, Springer;European Society for Population Economics, vol. 36(2), pages 813-846, April.
    2. Furtado, Delia & Papps, Kerry L. & Theodoropoulos, Nikolaos, 2022. "Who Goes on Disability when Times are Tough? The Role of Work Norms among Immigrants," European Economic Review, Elsevier, vol. 143(C).
    3. Philip Armour & Melanie A. Zaber, 2020. "Does Student Loan Forgiveness Drive Disability Application?," NBER Working Papers 26787, National Bureau of Economic Research, Inc.
    4. Eric Bettinger & Oded Gurantz & Monica Lee & Bridget Terry Long, 2023. "“Prior-Prior Year” FAFSA Increased Aid Submissions but Likely not Enrollment," Research in Higher Education, Springer;Association for Institutional Research, vol. 64(6), pages 789-807, September.
    5. Wang, Yanan & Liang, Shangkun & Kong, Dongmin & Wang, Qin, 2019. "High-speed rail, small city, and cost of debt: Firm-level evidence," Pacific-Basin Finance Journal, Elsevier, vol. 57(C).

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