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

Author

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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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    1. D.P. Doessel & Ruth F.G. Williams, 2011. "Disabled people's living standards: filling a policy vacuum," International Journal of Social Economics, Emerald Group Publishing, vol. 38(4), pages 341-357, March.
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    9. Ruth Hancock & Marcello Morciano & Stephen Pudney & Francesca Zantomio, 2015. "Do household surveys give a coherent view of disability benefit targeting?: a multisurvey latent variable analysis for the older population in Great Britain," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 178(4), pages 815-836, October.
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    14. repec:mpr:mprres:6018 is not listed on IDEAS
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    16. Pudney, Stephen, 2010. "Disability benefits for older people: how does the UK Attendance Allowance system really work?," ISER Working Paper Series 2010-02, Institute for Social and Economic Research.
    17. Asghar Zaidi & Tania Burchardt, 2005. "Comparing Incomes When Needs Differ: Equivalization For The Extra Costs Of Disability In The U.K," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 51(1), pages 89-114, March.
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    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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    1. repec:spr:soinre:v:135:y:2018:i:1:d:10.1007_s11205-016-1483-2 is not listed on IDEAS
    2. 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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