Social Security’s Disability Benefits Save Lives

A third of the people who receive federal disability benefits have no income other than their benefit checks. And given their serious medical conditions, their death rate is much higher than that of the general population.

In such a vulnerable group, small increases in their disability checks produce big results, finds a new study funded by Social Security, which administers the federal program.

For individuals receiving about $10,400 a year in average benefits, for example, an additional $1,000 per year would cut their mortality rate by up to a third of a percentage point in the first four years after their benefits start.

The researchers found similar, positive results for disabled workers with families. When the combined benefits paid to an adult with a disability and his or her dependents add up to about $21,900, on average, an extra $1,000 a year would reduce the adult’s mortality by a quarter of a percentage point. The longevity gains are largest in the first year and shrink after that.

To explain why mortality drops when people have more cash, the researchers point to other studies. Since people with disabilities typically have very low incomes, they often cut corners in ways that may harm their health, by delaying seeing a doctor, moving to cheaper housing with substandard heating, or skipping meals. With more money in their pockets, they could take steps to improve their health. Buying more nutritional groceries that have less salt than processed foods, for example, is good for heart health.

“More [disability] income may limit hardships and improve health,” the researchers said.

They estimated the declines in mortality by exploiting the fact that Social Security’s progressive formula, which bases benefits on a worker’s former earnings, awards a higher percentage of earnings to people who earned less. Using this variation, they could estimate how mortality rates change as the benefit percentages change for disability recipients with otherwise similar characteristics.

The longevity gains are not the same for everyone. A good example of who gains more from a larger disability check are the individuals who receive Social Security’s approval for benefits when they first apply. The decline in their mortality rate is larger than for people who have to appeal the agency’s decision after the initial benefit application was denied. Because people who get faster approvals are usually in poorer health, they may have more to gain from getting the extra cash.

The longevity gains also dissipate when an individual’s disability benefits hit about $29,000 a year. At this level, an extra $1,000 has no discernible impact. Perhaps these people already have a bit more room in their budgets to spend their money in ways that are better for their health.

The researchers said their study has implications for other government programs as well. Social insurance programs in modern, developed countries, they said, “can have large previously unrecognized welfare benefits.”

To read this study by Alexander Gelber, Timothy Moore, Zhuan Pei, and Alexander Strand, see “Disability Insurance Income Saves Lives.”

The research reported herein was derived in whole or in part from research activities performed pursuant to a grant from the U.S. Social Security Administration (SSA) funded as part of the Retirement and Disability Research Consortium.  The opinions and conclusions expressed are solely those of the authors and do not represent the opinions or policy of SSA, any agency of the federal government, or Boston College.  Neither the United States Government nor any agency thereof, nor any of their employees, make any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of the contents of this report.  Reference herein to any specific commercial product, process or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply endorsement, recommendation or favoring by the United States Government or any agency thereof.