Measuring cost of disability …

Researchers, advocates, and policymakers often cite statistics about the relative income of people with and without disabilities. The idea being that barriers to participation in the labor market limit the ability of people with disabilities to secure an adequate level of economic well-being. However, direct comparisons of income levels between people with and without disabilities can mask many of the factors and dynamics that influence well-being, leading to an underestimate of the well-being gap. This blog concentrates on one of these factors – the extra costs of living with a disability.

Poverty lines are drawn to represent a minimum level of well-being. Typically, they are based on the costs of an adequate diet plus other basic necessities. The problem is that people with disabilities have additional necessities. They often require assistive devices, personal assistance, additional medical care or transportation expenses, and more.[1] Without these things, even if they have the same level of income as a person without a disability, they have a lower level of well-being. A person with a disability at the official poverty line, in reality is living below the minimum level of well-being that that poverty line was meant to establish.

A growing body of empirical research relying on data mostly from high income countries, but also some low and middle-income countries, has led to estimates of about one-third of the average wage. These estimates vary by type of disability, age, and country, but wherever they have been computed they have been highly significant.[2]

How can these costs be estimated?  There are three methods, each with their own strengths and drawbacks.

The Goods and Services (GS) approach directly measures the extra money spent because of a disability through in-depth interviews. One difficulty is that not all extra expenses are easily identified. The cost of a wheelchair may be clear, but getting details on how much extra health care is needed, how many extra taxi rides, or whether a family needs to live in a more accessible and thus more expensive part of town, is not as clear. Also, this method registers only what is spent, not what is needed. Maybe a person needs a hearing aid but one is not available. Or, maybe, a person needs a hearing aid and one is available, but the person’s family does not want to spend the money on it. Such intra-family discrimination can also lead to underestimates of what is needed to reach that minimum level of well-being embodied in the poverty line.

The Goods and Services Required (GSR) approach deals with this last point. Based on interviews with people with disabilities, it attempts to identify what extra goods and services a person with a disability requires to equalize their opportunities with people without disabilities. A problem here, however, is how does one put prices on goods or services that may not be available? And how does one determine what goods and services are necessary when the people being interviewed may not be aware of them?

One problem with both of these approaches is that they are very resource intensive. They require many extensive interviews of people with disabilities that go well beyond what a typical household survey would ask. Practically speaking they cannot be done on a regular basis, especially if one is concerned with having a big enough sample to be nationally representative, or to compare costs across different regions of the same country.

A third method, the Standard of Living (SOL) approach, requires a lot fewer resources, but comes with its own set of issues. The method starts with the assumption that if households with disabled family members have the same attributes – region of residence, education level, household size, etc. – they will save and accumulate assets at the same rate once their necessities are accounted for. Therefore, if we statistically compare households with and without disabled family members who have the same attributes and the same level of income, then any difference in their accumulated assets must be because they had additional expenses related to disability. Using econometric techniques, differences in the assets owned can be used to construct an estimate of the extra costs of disability.

 The advantage of the SOL method is that by just adding the Washington Group questions on disability to any household expenditure survey will enable these estimates. No special survey is required. All countries routinely conduct such surveys so no special funding or statistical infrastructure is required, other than the willingness to add a short set of disability questions to an existing survey.

The limitation is that, as with the GS method, only what is spent is accounted for, not what is needed. And unlike the GSR method, the SOL does not generate estimates of what is needed. However, it does provide an evidence-based measure of how disability is currently affecting household expenditures. And since the SOL is attached to nationally representative surveys, it can give estimates for the whole country, and show how these costs vary by other characteristics, such as age, gender, and region of residence. And if the sample is large enough, by type of disability.

For a review of the literature on the SOL approach see:  Mitra, et al.

[1] Tribble, Hanass-Hancock and Deghaye (2015)

[2] Mitra et al.