May 29, 2012

While Straining To Prove A Minor Point, David Autor Undermines His Entire Thesis

     David Autor is an MIT economist who has done research on the Social Security disability programs. His basic beliefs seem to be that the existence of Social Security disability benefits is a bad thing because if it did not exist some people who are now drawing these benefits would still be working. At the least, he thinks it is too easy to get Social Security disability benefits and that this takes people out of the workforce unnecessarily. I have recently been critical of Autor because it appears to me that he has not taken the time to study the statutes and regulations and policies defining disability and encouraging return to work. Instead, he has just made his own mistaken assumptions about what must these must say. Autor seems far more comfortable with mathematical equations than with the U.S. Code and the Code of Federal Regulations, much less with the flesh and blood people who apply for Social Security disability benefits.
     Autor is the lead researcher on a new study titled Does Delay Cause Decay? The Effect of Administrative Decision Time on the Labor Force Participation and Earnings of Disability Applicants. Autor and his colleagues go to a lot of trouble to try to prove that the existence of time-consuming appeals mechanisms at Social Security discourage return to work. In the end, by making a lot of possibly questionable assumptions and extrapolations, Autor and his colleagues come to the conclusion that there is some minor decrease in work as a result of the appears process, 3.6% for denied applicants and 5.2% for allowed applicants. And to that, I give a big yawn. I don't doubt that there is some small, fairly meaningless decrease in return to work but I have no idea how we avoid it without doing vast injustice to disabled people.
     However, Autor does not seem to note he has collected data that dramatically undermines his thesis that it is too easy to get on Social Security disability benefits. Below are his numbers from table 1 on page 25 of the report (page 29 of the PDF) concerning return to work by those who apply for Social Security disability benefits and who are then either denied or approved, either initially or after appeals:

      If it is so easy to get on Social Security disability benefits, why is it that such a low percentage of denied applicants go back to work? According to Autor's theory many of those approved should be working but it turns out that even the vast majority of those denied don't go back to work. Four years after being denied at the initial level, 85% are still out of work and Autor thinks it's too easy to get Social Security disability benefits! Yes, if you hold an economic gun to the heads of people who apply for Social Security disability benefits, a few will go back to work but the vast majority don't. Doesn't that mean something? Shouldn't that also be worthy of Autor's attention?


Anonymous said...

your critique relies on a flawed premise. Just because people who are denied benefits don't return to work, doesn't mean that they are disabled.

Unable to find a job does not equal disabled.

However, those who are denied at the hearing level have likely been out of work for at least twelve months...making it much tougher for them to get back into the workforce.

Anonymous said...

For many people, the difference between disability and working is motivation. If you are motivated to work, you can find a way to work (with some obvious exceptions). It should not be surprising that many unsuccessful disability applications remain unemployed (especially those who had poor work histories and are seeking SSI (and were not stay-at-home mothers)), because they were not particularly motivated to begin with.

Anonymous said...

As the above poster commented, inability to find a job in an economy that is still suffering, has nothing to do with one's disability status.

We shouldnt be paying people just because the cant find a job. But many, many ALJs do. Whether it's to pay down the backlog, or just sympathy for the claimant's financial, as opposed to medical, status.

Anonymous said...

I have a disability. It's always disturbing to read one sided or biased comments.

The commissioner should add another step in his decision making process(step 6)in connection
with the ada.

If requirements met,this step would provide a different type of coverage(without benefits unless
impairment related termination or difficulty)and remain in effect throughout any work attempt or

Is this a good idea?

Anonymous said...

There is no need for a sixth step. If you can work at Step 5, that means you can work without special accommodations. If you require special accommodations to work, you are disabled at Step 5.

Anonymous said...

Dealing with the people that have filed that are clearly disabled, and have to wait for extended periods, I would say it is not that easy to get disability.

My own spouse became disabled at 58, and went to an ALJ and got approved for SSDI. I will say that there is generally a difference between SSI and SSDI applicants, as far as malingering.

People that have worked and paid in tend to be the type that would rather work if they could. As opposed to people that may have never had jobs and been on welfare most of their lives then applying for disability.

Anonymous said...

"paid in" is a pretty generous term. I'm not sure of the exact numbers, but earnings of approximately $500 per year get your covered for SSDI. Not sure you can really argue that people who have those type of low earnings haven't been on "welfare"

Anonymous said...

Anon 6:52 - for the bare minimum, to get one QC in 2012, you have to earn $1130, so to get the max of 4 QC's in 2012, the earnings have to be $4520, not $500. Those low earnings will make a person insured and eventually entitled to Medicare, but the monthly benefit will be commensurate with the low earnings, maybe $200 or $300 per month if there is only the bare miniumum earned.

Anonymous said...

Consider a single man who earns the average wage throughout his career ($43,100 in 2010 dollars), works every year from age 22 to 64, and then retires at age 65 in 2010. Over his lifetime he has paid $345,000 into the system. But he is likely to get back $72,000 more than that, or $417,000 in Social Security and Medicare payouts, according to recent Urban Institute calculations. A single women with the same work and tax history will come out even further ahead due to her longer life expectancy, likely netting $464,000 in lifetime benefits, which is $192,000 more than she paid into the system. These amounts are in constant 2010 dollars and assume a 2 percent real interest rate.

Medicare benefits are the main reason most workers are coming out ahead. A male earning the average wage throughout his working life who retires in 2010 paid $55,000 into the Medicare trust fund, but is likely to receive $161,000 worth of Medicare benefits, the Urban Institute found. In contrast, he pays $290,000 in Social Security taxes throughout his career and collects $256,000 in retirement payments.

For the disabled, depending on age at time of filing the amount of the Medicare goes up to pay for the conditions that caused the disability. Most people do not understand that Medicare Part B premiums are only 25% of the monthly cost, the government picks up the rest. That does not include a Part D prescription drug plan with donut hole costs, or drugs not covered by Part D. If you want back only what you paid it, go ahead and take it, but you are on your own, and dont show up at the ER and expect the rest of us to pay for it. Send the bill to Mit.