Incentivising disability

If you subsidise something, you get more of it. There's a lot going on in this story of one American family with four generations on disability benefits, 

The boys were identical twins William and Dale, 10. They were the fourth generation in this family to receive federal disability checks, and the first to be declared no longer disabled and have them taken away. In days that had grown increasingly tense, as debts mounted and desperation grew to prove that the twins should be on disability, this was always the worst time, before the medication kicked in, when the mobile home was filled with the sounds of children fighting, dogs barking, adults yelling, television volume turned up.

Traditional welfare benefits became harder to get after welfare reform; disability benefits require making a case that you're disabled.

“I’ve been aware of it my whole professional life,” said Michael L. Price, a demographer who retired from the University of Louisville in 2013. “In eastern Kentucky and other rural areas, you’re more likely to have intergenerational households, not just two but three generations. You have grandparents, very young grandparents, living together with grandchildren or in close proximity. And families don’t separate, so it sets it up not only for the next generation, but for two generations, that ‘This is what’s there, this is what you’re dependent on.’ ”

Other experts, however, say the phenomenon has little to do with generational dependence. “I hesitate to use a term like ‘culture.’ It’s not a specific, measurable metric,” said Kathleen Romig, an analyst with the Center on Budget and Policy Priorities, who studies disability in the United States. “Certain things like toxic stress or nutrition or preterm births or parental depression or genetics” offer a more revealing context for understanding generational disability.

And yet others say it’s about money.

Ruth Horn, director of social services in Buchanan County, Va., which has one of the country’s highest rates of disability, has spent decades working with profoundly poor families. Some parents, she said, don’t encourage their children academically, and even actively discourage them from doing well, because they view disability as a “source of income,” and think failure will help the family receive a check.

“It’s not a hard thing to limit a person,” Horn said, adding: “It’s generations deep.”

Much of the story is about the family's desperation to get the grandkids diagnosed as disabled in order to draw higher benefits.

It makes sense that social services should be targeted towards those who are unable to work because of disability. But so-doing also encourages diagnosis-seeking. Welfare has horrible tradeoffs.

Meanwhile, disability assistance in New Zealand [NOTE: see important update below], in real per capita terms, was flat from 1998 through about 2008, spiked upwards in 2009, and has since eased back to roughly where it was in the mid-2000s. Or at least that's how it looks in playing around a bit with Victoria Uni / NZIER's tables. All errors mine - I did the real and percap adjustments from their tables.

It looks like the GFC saw a big increase in disability assistance, but with a reasonably sharp return to the prior level.

UPDATE: Sam, below in comments, says (correctly) that disability assistance is the wrong line-item to be looking at. I'd need to be looking at the invalid's benefit and the supported living payment. When I do that, I get this:

The real per-capita figure rose from 1998 to 2008 and has since roughly flatlined.

Another email correspondent tells me WINZ may be using the Supported Living Payment as a place to put difficult clients with whom they don't want to have frequent interactions.


Previously: Competing for aid