Do Self-insurance and Disability Insurance Prevent Consumption Loss on Disability?

Steffan Ball () and Hamish Low

Economica, 2014, vol. 81, issue 323, 468-490

Abstract: type="main" xml:id="ecca12079-abs-0001">

We show the extent to which public insurance and self-insurance mitigate the cost of health shocks that limit the ability to work. We use consumption data from the UK to estimate insurance provided by government disability programmes. Individuals with a work-limiting health condition, in receipt of disability insurance, have 9% lower consumption than those without such a condition. Self-insurance through savings and a work-active partner each improve outcomes by about 3%. Reduced generosity of disability insurance after 1995 is associated with increases in the consumption loss on disability, implying worse insurance, but with fewer false claimants, implying better targeting.

Date: 2014
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Working Paper: Do self-insurance and disability insurance prevent consumption loss on disability? (2009)
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