Household self-insurance and the value of disability insurance in the United States

Arbeitspapier

This paper uses a life cycle model to study the welfare implications of reforms to U.S. Disability Insurance (DI) while accounting for household self-insurance. In addition to crowding out the insurance value of DI, household self-insurance may drive negative selection into DI by reducing implicit application costs. Allowing for such interactions, I find that revenue-neutral expansionary DI reforms do not necessarily improve welfare. However, an asset test reduces negative selection and improves the welfare effects of DI expansions. Household self-insurance crowds out the value of DI expansions, but abstracting away from insurance value can still deliver erroneous policy recommendations.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IFS Working Paper ; No. W22/14

Classification and Topics

• Classification: Wirtschaft

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Kellogg, Maxwell
• Event: Veröffentlichung
• (who): Institute for Fiscal Studies (IFS)
• (where): London
• (when): 2022

Further information

• DOI: doi:10.1920/wp.ifs.2022.1422
• Handle: http://hdl.handle.net/10419/267945
• Last update: 10.03.2025, 11:45 AM CET