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The Growth in the Social Security Disability Rolls: A Fiscal Crisis Unfolding

Authors: Autor, David H.; Duggan, Mark G.

Source: The Journal of Economic Perspectives, Volume 20, Number 3, Summer 2006 , pp. 71-96(26)

Publisher: American Economic Association

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Abstract:

The U.S. Social Security Disability Insurance (DI) program has grown dramatically over the last 20 years in size and expense. This growth poses significant risks to the finances of the DI program and the broader Social Security system, and raises troubling questions as to whether the program is being misused by claimants. This article first provides an overview of the Disability Insurance program, describing who qualifies for the program, how an individual applies for benefits and how the level of benefits is determined. Next, we summarize the factors responsible for the growth in the DI rolls and discuss how the characteristics of DI recipients have changed as a result. We then explore the extent of moral hazard in the DI program and the effectiveness of the screening process in distinguishing meritorious from nonmeritorious claims. Finally, we identify the challenges that the DI program creates for Social Security finances and Social Security reform, and discuss potential reforms to the DI program.

Document Type: Research Article

DOI: http://dx.doi.org/10.1257/089533006780387571

Publication date: June 1, 2006

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  • The Journal of Economic Perspectives (JEP) attempts to fill a gap between the general interest press and most other academic economics journals. The journal aims to publish articles that will serve several goals: to synthesize and integrate lessons learned from active lines of economic research; to provide economic analysis of public policy issues; to encourage cross-fertilization of ideas among the fields of thinking; to offer readers an accessible source for state-of-the-art economic thinking; to suggest directions for future research; to provide insights and readings for classroom use; and to address issues relating to the economics profession.
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