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Induced Entry Effects of a $1 for $2 Offset in SSDI Benefits

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Author Info

  • Hugo Benitez-Silva

    ()
    (Dept. of Economics, SUNY at Stony Brook)

  • Moshe Buchinsky

    (UCLA and NBER)

  • John Rust

    (University of Maryland)

Abstract

This paper presents an .audit. of the multistage application and appeal process that the U.S. Social Security Administration (SSA) uses to determine eligibility for disability benefits from the Disability Insurance (DI) and Supplemental Security Income (SSI) programs. We use a subset of individuals from the Health and Retirement Study who applied for DI or SSI benefits between 1992 and 1996, to estimate classification error rates under the hypothesis that applicants' self-reported disability status and the SSA's ultimate award decision are noisy but unbiased indicators of a latent .true disability status. indicator. We find that approximately 20% of SSI/DI applicants who are ultimately awarded benefits are not disabled, and that 60% of applicants who were denied benefits are disabled. We also construct an optimal statistical screening rule that results in significantly lower classification error rates than does SSA's current award process.

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File Function: First version, 2005
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Bibliographic Info

Paper provided by Stony Brook University, Department of Economics in its series Department of Economics Working Papers with number 05-03.

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Date of creation: Mar 2005
Date of revision:
Handle: RePEc:nys:sunysb:05-03

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Postal: Stony Brook, NY 11794-4384
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Web page: http://www.stonybrook.edu/economics
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Cited by:
  1. Hugo Benitez-Silva & Frank Heiland, 2006. "The Social Security Earnings Test Revisited: Information, Distortions, and Costs," Department of Economics Working Papers 06-04, Stony Brook University, Department of Economics.
  2. Hugo Benítez Silva & Richard Disney & Sergi Jiménez-Martín, 2009. "Disability, capacity for work and the business cycle: An international perspective," Economics Working Papers 1171, Department of Economics and Business, Universitat Pompeu Fabra.

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