When the government extends benefits to individuals with specific characteristics (e.g., poverty, disability), the number of people who claim to have these characteristics will necessarily increase. For instance, there are reports that unemployed individuals who no longer qualify for welfare are now moving onto the disability rolls in large numbers. Are these people really disabled?
A recent study by , and
…a significant number of those with a disability fail to be recorded as such in the British Household Panel Survey. In addition, the probability of a false positive is estimated as being very close to zero in all socio-demographic groups. There is a strong bias in estimates of differences in rates of disability across groups but only a small effect on estimates of the difference in employment rates by disability status.
Like the US, the UK has a disability program known as the Personal Independence Payment. Thus, this study may indicate that most people who claim disability are “deserving” after all.
- , and (2014), CORRECTION OF MISCLASSIFICATION ERROR IN DISABILITY RATES, Health Econ., doi: 10.1002/hec.3080
- . 1996. Bounding the effects of measurement error in regressions involving dichotomous variables. Journal of Econometrics 73:387–399.