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

21 Pages Posted: 20 Aug 2015

See all articles by Marcello Morciano

Marcello Morciano

University of Essex - Institute for Social and Economic Research (ISER)

Ruth Hancock

University of Essex - Department of Health and Human Sciences

Stephen Pudney

University of Essex - Institute for Social and Economic Research (ISER)

Date Written: September 2015

Abstract

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.

Keywords: costs of disability, disability indexes, equivalence scale, standard of living, structural equation modeling

JEL Classification: C81, D10, I10

Suggested Citation

Morciano, Marcello and Hancock, Ruth and Pudney, Stephen, Disability Costs and Equivalence Scales in the Older Population in Great Britain (September 2015). Review of Income and Wealth, Vol. 61, Issue 3, pp. 494-514, 2015. Available at SSRN: https://ssrn.com/abstract=2647132 or http://dx.doi.org/10.1111/roiw.12108

Marcello Morciano (Contact Author)

University of Essex - Institute for Social and Economic Research (ISER) ( email )

Wivenhoe Park
Colchester CO4 3SQ
United Kingdom

Ruth Hancock

University of Essex - Department of Health and Human Sciences ( email )

Wivenhoe Park
Colchester, CO4 3SQ
United Kingdom

Stephen Pudney

University of Essex - Institute for Social and Economic Research (ISER) ( email )

Wivenhoe Park
Colchester CO4 3SQ
United Kingdom

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
1
Abstract Views
197
PlumX Metrics