BOND Experiment A Complete Failure

     While looking for something else, I happened upon a report on the BOND experiment. It was issued last October but Social Security made no effort to publicize it. Here's an excerpt explaining what BOND is or was and what the results have been:

Congress directed the Social Security Administration (SSA) to test alternative Social Security Disability Insurance (SSDI) work rules designed to increase the incentive for SSDI beneficiaries to work and reduce the total amount of SSDI benefits paid to beneficiaries. In response, SSA has undertaken the Benefit Offset National Demonstration (BOND), a random assignment test of alternative SSDI program rules governing work and other supports. BOND tests a $1 for $2 benefit offset applied to annual earnings above the BOND Yearly Amount (BYA)—the annual equivalent of SSDI’s substantial gainful activity amount. As a result, beneficiaries in the treatment group are able to retain some of their monthly cash benefits while earning more than BYA. The benefit offset reduces yearly SSDI benefits by $1 in SSDI benefits for every $2 in annual earnings above BYA (in other words, reduces yearly SSDI benefits by half the amount that annual earnings exceed the BYA threshold). ...

The analysis finds no confirmatory evidence of an impact of the benefit offset on average earnings in either the nationally-representative Stage 1 or in the Stage 2 sample of volunteers. In contrast, the analysis finds confirmatory evidence that, relative to current law, the benefit offset policy increased the average amount of SSDI benefits due to beneficiaries over five years. In the nationally-representative Stage 1, the positive impact on SSDI benefits was $143 per year (or about $12 per month)—an increase of slightly more than 1 percent of the current-law average benefits. ... 

For the nationally representative Stage 1 sample, the benefit-cost analysis found a net social cost of the BOND offset. The very small estimated increases in earnings were not sufficient to offset the deadweight loss from increases in taxes needed to fund larger SSDI benefit payments. Distributional effects were much larger, with SSDI beneficiaries gaining income by receiving larger SSDI benefits and countervailing losses to the Disability Insurance Trust Fund. ...

     In case the verbiage confuses you, the result is clear.  BOND costs more than it saves. Social Security paid out more in benefits without inducing additional claimants to return to work or at least not enough of them to outweigh the additional benefits. BOND, just like all other efforts to induce Social Security disability recipients to return to work, is a failure. I think I understand why Social Security wasn't trumpeting this report.

     I think it's past time to consider the possibilities that Social Security disability recipients:

• Are generally quite sick
• Are generally getting sicker as they age -- very few ever improve
• Have little potential to return to work