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How Large are the Classification Errors in the Social Security Disability Award Process?

  • Hugo Benitez-Silva

    ()

    (Dept. of Economics, SUNY at Stony Brook)

  • Moshe Buchinsky

    (UCLA and NBER)

  • John Rust

    (University of Maryland)

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 URL: http://ms.cc.sunysb.edu/~hbenitezsilv/dice.pdf
File Function: First version, 2005
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Paper provided by Stony Brook University, Department of Economics in its series Department of Economics Working Papers with number 05-02.

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Length: 53 pages.
Date of creation: 2005
Date of revision:
Handle: RePEc:nys:sunysb:05-02
Contact details of provider: Postal: Stony Brook, NY 11794-4384
Phone: (631)632-7540
Fax: (631)632-7516
Web page: http://www.stonybrook.edu/commcms/economics/
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  1. Parsons, Donald O., 1996. "Imperfect 'tagging' in social insurance programs," Journal of Public Economics, Elsevier, vol. 62(1-2), pages 183-207, October.
  2. 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.
  3. John Rust & Christopher Phelan, 1994. "How Social Security and Medicare Affect Retirement Behavior in a World of Incomplete Markets," Public Economics 9406005, EconWPA, revised 06 Jul 1994.
  4. Hugo Benitez-Silva & Moshe Buchinsky & Hiu Man Chan & Sofia Cheidvasser & John Rust, 2000. "How Large is the Bias is Self-Reported Disability?," NBER Working Papers 7526, National Bureau of Economic Research, Inc.
  5. Bound, John & Burkhauser, Richard V., 1999. "Economic analysis of transfer programs targeted on people with disabilities," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 51, pages 3417-3528 Elsevier.
  6. Diamond, P. A. & Mirrlees, J. A., 1978. "A model of social insurance with variable retirement," Journal of Public Economics, Elsevier, vol. 10(3), pages 295-336, December.
  7. Haveman, Robert & Wolfe, Barbara, 2000. "The economics of disability and disability policy," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 18, pages 995-1051 Elsevier.
  8. Bound, John & Waidmann, Timothy, 1992. "Disability Transfers, Self-Reported Health, and the Labor Force Attachment of Older Men: Evidence from the Historical Record," The Quarterly Journal of Economics, MIT Press, vol. 107(4), pages 1393-419, November.
  9. 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.
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