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How Large is the Bias is Self-Reported Disability?

Listed author(s):
  • Hugo Benitez-Silva
  • Moshe Buchinsky
  • Hiu Man Chan
  • Sofia Cheidvasser
  • John Rust

A pervasive concern with the use of self-reported health and disability measures in behavioral models is that they are biased and endogenous. A commonly suggested explanation is that survey respondents exaggerate the severity of health problems and incidence of disabilities in order to rationalize labor force non-participation, application for disability benefits and/or receipt of those benefits. This paper re-examines this issue using a self-reported indicator of disability status from the Health and Retirement Survey. Using a bivariate probit model we test and are unable to reject the hypothesis that the self-reported disability measure is an exogenous explanatory variable in a model of individual's decision to apply for DI benefits or Social Security Administration's decision to award benefits. We further study a subsample of individuals who applied for Disability Insurance and Supplemental Security Income benefits from the Social Security Administration (SSA) for whom we can also observe SSA's award/deny decision. For this subsample we test and are unable to reject the hypothesis that self-reported disability is health and socio-economic characteristics similar to the information used by the SSA in making its award decisions. The unbiasedness restriction implies that these two variables have the same conditional probability distributions. Thus, our results indicate that disability applicant do not exaggerate their disability status at least in anonymous surveys such as the HRS. Indeed, our results are consistent with the hypothesis that disability applicants are aware of the criteria and decision rules that SSA uses in making awards and act as if they were applying these same criteria and rules when reporting their own disability status.

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File URL: http://www.nber.org/papers/w7526.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7526.

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Date of creation: Feb 2000
Publication status: published as Benitez-Silva, Hugo, Moshe Buchinsky, Hiu Man Chan, Sofia Cheidvasser, and John P. Rust. "How Large is the Bias is Self-Reported Disability?" Journal of Applied Econometrics 19 (2004): 649-670.
Handle: RePEc:nbr:nberwo:7526
Note: AG LS
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  1. Horowitz, Joel L. & Spokoiny, Vladimir G., 1999. "An Adaptive, Rate-Optimal Test of a Parametric Model Against a Nonparametric Alternative," Working Papers 99-02, University of Iowa, Department of Economics.
  2. Hugo Benitez-Silva & Moshe Buchinsky & Hiu Man Chan & Sofia Cheidvasser & John Rust, 2000. "How Large is the Bias in Self-Reported Disability?," Working Papers 2000-01, Brown University, Department of Economics.
  3. Bound, John, 1989. "The Health and Earnings of Rejected Disability Insurance Applicants," American Economic Review, American Economic Association, vol. 79(3), pages 482-503, June.
  4. James J. Heckman, 1977. "Dummy Endogenous Variables in a Simultaneous Equation System," NBER Working Papers 0177, National Bureau of Economic Research, Inc.
  5. Kerkhofs, Marcel & Lindeboom, Maarten & Theeuwes, Jules, 1998. "Retirement, financial incentives and health," Serie Research Memoranda 0042, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
  6. Parsons, Donald O, 1991. "The Health and Earnings of Rejected Disability Insurance Applicants: Comment," American Economic Review, American Economic Association, vol. 81(5), pages 1419-1426, December.
  7. Debra Sabatini Dwyer & Olivia S. Mitchell, 1998. "Health Problems as Determinants of Retirement: Are Self-Rated Measures Endogenous?," NBER Working Papers 6503, National Bureau of Economic Research, Inc.
  8. John Bound, 1991. "Self-Reported Versus Objective Measures of Health in Retirement Models," Journal of Human Resources, University of Wisconsin Press, vol. 26(1), pages 106-138.
  9. Rust, J., 1994. "Using Randomization to Break the Curse of Dimensionality," Working papers 9429, Wisconsin Madison - Social Systems.
  10. John Rust & Christopher Phelan, 1997. "How Social Security and Medicare Affect Retirement Behavior in a World of Incomplete Markets," Econometrica, Econometric Society, vol. 65(4), pages 781-832, July.
  11. Richard V. Burkhauser & Robert H. Haveman & Barbara L. Wolfe, 1993. "How people with disabilities fare when public policies change," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 12(2), pages 251-269.
  12. Steven Stern, 1989. "Measuring the Effect of Disability on Labor Force Participation," Journal of Human Resources, University of Wisconsin Press, vol. 24(3), pages 361-395.
  13. Halpern, Janice & Hausman, Jerry A., 1986. "Choice under uncertainty: A model of applications for the social security disability insurance program," Journal of Public Economics, Elsevier, vol. 31(2), pages 131-161, November.
  14. Jianting Hu & Kajal Lahiri & Denton R. Vaughan & Bernard Wixon, 2001. "A Structural Model Of Social Security'S Disability Determination Process," The Review of Economics and Statistics, MIT Press, vol. 83(2), pages 348-361, May.
  15. John Bound & Michael Schoenbaum & Todd R. Stinebrickner & Timothy Waidmann, 1998. "The Dynamic Effects of Health on the Labor Force Transitions of Older Workers," NBER Working Papers 6777, National Bureau of Economic Research, Inc.
  16. Robert Haveman & Philip de Jong & Barbara Wolfe, 1991. "Disability Transfers and the Work Decision of Older Men," The Quarterly Journal of Economics, Oxford University Press, vol. 106(3), pages 939-949.
  17. John Bound & Michael Schoenbaum & Timothy Waidmann, 1995. "Race and Education Differences in Disability Status and Labor Force Attachment," NBER Working Papers 5159, National Bureau of Economic Research, Inc.
  18. 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.
  19. Kathryn H. Anderson & Richard V. Burkhauser, 1985. "The Retirement-Health Nexus: A New Measure of an Old Puzzle," Journal of Human Resources, University of Wisconsin Press, vol. 20(3), pages 315-330.
  20. Kenneth L. Judd, 1998. "Numerical Methods in Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262100711, December.
  21. Donald W. K. Andrews & Moshe Buchinsky, 2000. "A Three-Step Method for Choosing the Number of Bootstrap Repetitions," Econometrica, Econometric Society, vol. 68(1), pages 23-52, January.
  22. Horowitz, Joel L. & Spokoiny, Vladimir G., 1999. "An adaptive, rate-optimal test of a parametric model against a nonparametric alternative," SFB 373 Discussion Papers 1999,10, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
  23. Bierens, Herman J, 1990. "A Consistent Conditional Moment Test of Functional Form," Econometrica, Econometric Society, vol. 58(6), pages 1443-1458, November.
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