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Value of Sample Separation Information in a Sequential Probit Model: Another Look at SSA's Disability Determination Process

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Author Info
Kajal Lahiri
Chuanming Gao
Bermard Wixon

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Abstract

We have estimated a 4-step sequential probit model with and without sample separation information to characterize SSA's disability determination process. Under the program provisions, different criteria dictate the outcomes at different steps of the process. We used data on health, activity limitations, demographic traits, and work from 1990 SIPP exact matched to SSA administrative records on disability determinations. Using GHK Monte Carlo simulation technique, our estimation results suggest that the correlations in errors across equations that may arise due to unobserved individual heterogeneity are not statistically significant. In addition, we examined the value of administrative data on the basis for allow/deny determinations at each stage of the process. Following the marginal likelihood approach adopted by Benitez-Silva, Buchinsky, Chan, Rust, and Sheidvasser (1999), we also estimated the above sequential probit model without the sample separation information for the purpose of direct comparison. We found that without the detailed administrative information on outcomes at each stage of the screening process, we could not properly evaluate the importance of a large number of program-relevant survey-based explanatory variables. In terms of both in-sample and jackknife-type out-of-sample predictive analysis, the value of modeling the sequential structure of the determination process in generating correct eligibility probabilities is confirmed.

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Paper provided by University at Albany, SUNY, Department of Economics in its series Discussion Papers with number 01-12.

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Date of creation: 2001
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Handle: RePEc:nya:albaec:01-12

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Postal: Department of Economics, BA 110 University at Albany State University of New York Albany, NY 12222 U.S.A.
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Postal: Department of Economics, BA 110 University at Albany State University of New York Albany, NY 12222 U.S.A.
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Keywords: Disability; Method of Simulated Movements; Multivariate Probit; Social Security;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  2. Meng, Chun-Lo & Schmidt, Peter, 1985. "On the Cost of Partial Observability in the Bivariate Probit Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 26(1), pages 71-85, February. [Downloadable!] (restricted)
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  5. Keane, Michael P, 1994. "A Computationally Practical Simulation Estimator for Panel Data," Econometrica, Econometric Society, vol. 62(1), pages 95-116, January. [Downloadable!] (restricted)
  6. Jones, Andrew M, 1989. "A Double-Hurdle Model of Cigarette Consumption," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 4(1), pages 23-39, Jan.-Mar.. [Downloadable!] (restricted)
  7. Poirier, Dale J., 1980. "Partial observability in bivariate probit models," Journal of Econometrics, Elsevier, vol. 12(2), pages 209-217, February. [Downloadable!] (restricted)
  8. Benitez-Silva, Hugo & Buchinsky, Moshe & Chan, Hiu Man & Rust, John & Sheidvasser, Sofia, 1999. "An empirical analysis of the social security disability application, appeal, and award process," Labour Economics, Elsevier, vol. 6(2), pages 147-178, June. [Downloadable!] (restricted)
  9. Hugo Benitez-Silva & Moshe Buchinsky & Hiu-Man Chan & John Rust & Sofia Sheivasser, 1997. "An Empirical Analysis of the Social Security Disability Application, Appeal, and Award Process," Public Economics 9712001, EconWPA, revised 16 Feb 1998. [Downloadable!]
  10. Cragg, John G, 1971. "Some Statistical Models for Limited Dependent Variables with Application to the Demand for Durable Goods," Econometrica, Econometric Society, vol. 39(5), pages 829-44, September. [Downloadable!] (restricted)
  11. Vassilis A. Hajivassiliou, 1991. "Simulation Estimation Methods for Limited Dependent Variable Models," Cowles Foundation Discussion Papers 1007, Cowles Foundation, Yale University. [Downloadable!]
  12. Diebold, Francis X & Mariano, Roberto S, 1995. "Comparing Predictive Accuracy," Journal of Business & Economic Statistics, American Statistical Association, vol. 13(3), pages 253-63, July.
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  13. Kiefer, Nicholas M, 1978. "Discrete Parameter Variation: Efficient Estimation of a Switching Regression Model," Econometrica, Econometric Society, vol. 46(2), pages 427-34, March. [Downloadable!] (restricted)
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  1. Dimitris Christelis & Dimitris Georgarakos & Michael Haliassos, 2009. "Stockholding: From Participation to Location and to Participation Spillovers," CFS Working Paper Series 2009/02, Center for Financial Studies. [Downloadable!]
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