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Disability Costs and Equivalence Scales in the Older Population in Great Britain

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  • Marcello Morciano
  • Ruth Hancock
  • Stephen Pudney

Abstract

type="main"> We use a standard of living (SoL) approach to estimate older people's disability costs, using data on 8000 individuals from the U.K. Family Resources Survey. We extend previous research in two ways. First, by allowing for a more flexible relationship between SoL and income, the structure of the estimated disability cost and equivalence scale is not dictated by a restrictive functional form assumption. Second, we allow for the latent nature of disability and SoL, addressing measurement error in the disability and SoL indicators in surveys. We find that disability costs are strongly related to severity of disability, and vary with income in absolute and proportionate terms. Older people above the median disability level require an extra £99 per week (2007 prices) on average to reach the SoL of an otherwise similar person at the median. Costs faced by older people in the highest decile of disability average £180.

Suggested Citation

  • Marcello Morciano & Ruth Hancock & Stephen Pudney, 2015. "Disability Costs and Equivalence Scales in the Older Population in Great Britain," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 61(3), pages 494-514, September.
  • Handle: RePEc:bla:revinw:v:61:y:2015:i:3:p:494-514
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    File URL: http://hdl.handle.net/10.1111/roiw.12108
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    References listed on IDEAS

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Thesis Thursday: Elizabeth Lemmon
      by Chris Sampson in The Academic Health Economists' Blog on 2019-08-15 06:00:18

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    Cited by:

    1. Guido Migliaccio, 2019. "Disabled People in the Stakeholder Theory: a Literature Analysis," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 10(4), pages 1657-1678, December.
    2. Michael Palmer & Jenny Williams & Barbara McPake, 2019. "Standard of Living and Disability in Cambodia," Journal of Development Studies, Taylor & Francis Journals, vol. 55(11), pages 2382-2402, November.
    3. Morris, Zachary A. & Zaidi, Asghar, 2020. "Estimating the extra costs of disability in European countries: Implications for poverty measurement and disability-related decommodification," LSE Research Online Documents on Economics 103778, London School of Economics and Political Science, LSE Library.
    4. Daley, Angela & Garner, Thesia & Phipps, Shelley & Sierminska, Eva, 2020. "Differences across Countries and Time in Household Expenditure Patterns: Implications for the Estimation of Equivalence Scales," IZA Discussion Papers 13246, Institute of Labor Economics (IZA).
    5. Binh Vu & Rasheda Khanam & Maisha Rahman & Son Nghiem, 2020. "The costs of disability in Australia: a hybrid panel-data examination," Health Economics Review, Springer, vol. 10(1), pages 1-10, December.
    6. Son Nghiem & Rasheda Khanam & Xuan-Binh Vu & Bach Xuan Tran, 2020. "Implicitly Estimating the Cost of Mental Illness in Australia: A Standard-of-Living Approach," Applied Health Economics and Health Policy, Springer, vol. 18(2), pages 261-270, April.
    7. Selcuk Beduk, 2018. "Missing the Unhealthy? Examining Empirical Validity of Material Deprivation Indices (MDIs) Using a Partial Criterion Variable," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 135(1), pages 91-115, January.
    8. Oznur Ozdamar & Eleftherios Giovanis, 2016. "The Link between Health Condition Costs and Standard of Living: A Structural Equation Modelling," Working Papers 1060, Economic Research Forum, revised 11 Jan 2016.

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