Disability costs and equivalence scales in the older population
Disabled people face higher costs of living than do non-disabled people. These additional costs include the cost of adapting the home, overcoming the difficulties of getting about, and acquiring assistance with everyday tasks that non-disabled people can do unaided.
Countries like the UK have welfare benefit systems that acknowledge these costs through disability-tested programmes like Attendance Allowance (AA) and Disability Living Allowance (DLA). But just how large are these disability-related costs? How far does the benefit system go in meeting them? And how should we take account of these costs when we measure poverty and inequality in populations that include both disaabled and non-disabled people?
In this research study, we construct dual indices of individuals’ standard of living and degree of disability, using UK survey data covering over 8,000 people who are over state pension age. We use these indices to estimate the additional income that each disabled person would need in order to reach the same standard of living as he or she would enjoy without any disability. There are two major empirical findings.
(1) The additional costs of living associated with disability are large: among the group of people with some detectable degree of disability, we estimate the average cost to just under £100 per week, which is around 50% of their weekly income. As one would expect, the size of disability costs rises sharply with the severity of disability.
(2) Although the disability benefits AA and DLA are well-targeted on people with significant disability, many disabled people do not receive them and, for those who do, they generally fall short of meeting the whole costs of disability. The average amount of benefit received by people with some disability is estimated at around £19, or less than a fifth of average costs.
As a consequence of these findings, we can say that older disabled people primarily cope with disability costs by accepting a substantially reduced standard of living rather than by generating additional income through the benefit system. Our findings also underline the importance of taking account of disability-related living costs when drawing conclusions about poverty and inequality in the older population, where the prevalence of disability is particularly high.