September 22, 2013
The Washington Post might not be very aggressive when it comes to billionaire too big to fail bankers, hedge and private equity fund swindlers, or pharmaceutical companies exploiting patent monopolies by pushing bad drugs, but when it comes to beating up on people getting $1,150 a month for disability, there is no one tougher. The Post is on the job again today with an editorial warning about the “explosive recent growth” in disability roles.
The Post conveniently ignores facts and reality in pushing its case. For example, it counters the views of “defenders of the program” with the views of “critics, including a significant number of academic economists.” Of course there are a large number of academic economists who are among the defenders of the program, but the Post did not think this point was worth mentioning; it could distract readers.
This sentence continues:
“suggest that the program’s manipulable and inconsistently applied eligibility criteria have enabled millions of people who could work to sign up for benefits instead.”
“Millions of people,” really? The work linked to in the paper won’t give you this number. One careful study that was produced by the University of Michigan a few years ago, identified categories of applicants that it deemed marginally eligible. It found that if this group was denied disability, 28 percent would be working two years later. Since this group accounted for 23 percent of applicants, that would mean 6.4 percent of applicants (28 percent of 23 percent) would be working in two years, if they were denied benefits.
There are currently just under 10 million disability beneficiaries. If we assume that 6.4 percent of these people would be working if they had been denied benefits that comes to 640,000 people. That is considerably short of “millions of people” in places other than the Washington Post opinion pages. Furthermore, the Michigan study found that the share of these marginal refusals who were working four years later fell to 16 percent, so the 640,000 figure is undoubtedly too high based on this analysis.
Of course the other point to keep in mind for those looking to crack down on these freeloaders is that our system will never be perfect. The inappropriate beneficiaries will not identify themselves. Any effort to tighten criteria to ensure that ineligible people don’t qualify will inevitably lead to more eligible people wrongly being denied benefits. In other words, the Post’s policy could mean that some people with terminal cancer don’t get benefits.
The piece then cites a study by economists at the San Francisco Federal Reserve Board:
“They found that technical and demographic factors such as those cited by defenders of SSDI explained no more than 56 percent of the program’s growth, suggesting that a substantial portion — at least 44 percent — is because of the kind of structural defects and perverse incentives that critics have cited.”
First, this misrepresents the study’s findings. It did not say that at least 44 percent of the growth in disability roles is “because of structural defects and perverse incentives.” It said that only 56 percent could be explained by technical and demographic factors. It is widely recognized outside of the pages of the Washington Post that it is more difficult for a person suffering from a disability to get a job in a weak economy than in a strong one. That does not mean that if these people apply for and receive disability benefits that it is due to the “structural defects and perverse incentives” of the program. The Post is simply ascribing its view to economists who certainly did not espouse these views themselves in the piece cited.
The cited paper also missed an important factor behind the increase in disability rates that the Congressional Budget Office noted in a 2010 study. CBO noted that the mortality rate for people with disabilities had fallen sharply since 1980. This means that if a person has a disability that keeps them from working they are likely to live much longer and therefore collect disability for a longer period of time.
The CBO study put the drop in the mortality rate between 1980 and 2008 at around 2 percentage points. With the lower mortality rate there is a 74 percent probability that a person on disability would survive ten years, with 1980 mortality rate the probability would have been less than 60 percent. This drop in the mortality rate would be an important factor explaining the rise in the number of people on disability which for some reason the Fed study neglected.
But there is no doubt that the bad economy is a major contributor to the rise in disability roles. In the reality based community this would be yet another reason for aggressively pursuing policies such as stimulus or a lower valued dollar that could bring us back to full employment. After all, in addition to the millions of lives being ruined by sustained periods of high unemployment we are also needlessly losing a trillion a year in output.
But the Post can’t be bothered talking about policies that would get us back to full employment, they’re worried that someone is running around with an $1,150 a month disability check to which they’re not entitled; only in the Washington Post.
Note: Typos, including in headline, fixed.
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