JSIT19-03: Disability, Disability Programs, and Wealth: Exploring Liquid Wealth Trajectories of Disability Program Applicants and Beneficiaries


  • Madelaine L'esperance, PhD


Social safety net programs provide benefits that insure against disability, poor health, unemployment, and old age. These programs stabilize the financial lives of beneficiaries. Recent work reveals that safety net programs, such as unemployment insurance, disability programs, and health insurance subsidies, protect workers from significant financial distress, including foreclosure, bankruptcy, eviction, and mortgage default (Deshpande et al. 2019; Hsu et al. 2018; Gallagher et al. 2019). These findings highlight the importance of investigating the effects of social insurance and public assistance programs on financial well-being. In this study, I investigate whether disability programs protect household wealth, including household savings and liquid assets. I explore how program applications and decisions map onto savings patterns. The analysis sheds light on a potential channel through which households cope with lost earnings and health care costs that accompany disability onset by tapping into liquid assets, like precautionary savings. Are the disabled spending down liquid wealth before disability program application, decision, and benefit receipt? In this study, I map liquid wealth trajectories and trends for disability program applicants leading up to application date as well as the decision date. This study uses longitudinal data on older Americans from the Health and Retirement Study (HRS) that includes rich data on assets, health, individual and household demographic characteristics as well as Social Security Administration (SSA) administrative data on Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI) applications, approvals, and benefits. In this study, I estimate how disability program applicant liquid wealth in aggregate and its composition change over time as well as compare differences across cohorts. Overall, the project contributes evidence on how disability program applicant liquid assets change as they progress through the program’s application and approval process.


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