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Comparing incomes when needs differ: Equivalisation for the extra costs of disability in the UK

Author

Listed:
  • Tania Burchardt
  • Asghar Zaidi
Abstract
Equivalisation of incomes for household size and composition is accepted practice when measuring poverty and inequality; adjustments to take account of other variations in needs are rarely made. This paper explores the financial implications of one possible source of additional needs: disability. Using two UK household surveys, we seek to establish whether there are extra costs of living associated with disability, and to quantify them using the ¿standard of living¿ approach. The underlying theory is that a household¿s standard of living is a function of income and needs. The extra costs of disability can be derived by comparing the standard of living of households with and without disabled members at a given income, having controlled for other sources of variation. Results show that the extra costs of disability are substantial, especially for disabled people living alone, and that these costs rise with severity of disability. To bring out the policy implications of these results, we compare and contrast three different income distributions which differ in their adjustment for the extra costs of disability, for the population as a whole and for various subgroups. We find that unadjusted incomes significantly understate the problem of low income amongst disabled people, and thereby in the population as a whole.

Suggested Citation

  • Tania Burchardt & Asghar Zaidi, 2003. "Comparing incomes when needs differ: Equivalisation for the extra costs of disability in the UK," CASE Papers 064, Centre for Analysis of Social Exclusion, LSE.
    • Handle: RePEc:cep:sticas:064
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    File URL: https://sticerd.lse.ac.uk/dps/case/cp/CASEpaper64.pdf
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    References listed on IDEAS

    as
    1. Pollak, Robert A & Wales, Terence J, 1979. "Welfare Comparisons and Equivalence Scales," American Economic Review, American Economic Association, vol. 69(2), pages 216-221, May.
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    Citations

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    Cited by:

    1. Wiebke Kuklys & Ingrid Robeyns, 2004. "Sens's Capability Approach to Welfare Economics," Papers on Strategic Interaction 2004-03, Max Planck Institute of Economics, Strategic Interaction Group.
    2. Wiebke Kuklys, 2004. "A Monetary Approach to Capability Measurement of the Disabled - Evidence from the UK," Papers on Strategic Interaction 2004-08, Max Planck Institute of Economics, Strategic Interaction Group.
    3. Giuliana Parodi & Dario Sciulli, 2012. "Disability and low income persistence in Italian households," International Journal of Manpower, Emerald Group Publishing Limited, vol. 33(1), pages 9-26, March.
    4. Parodi, Giuliana & Sciulli, Dario, 2012. "Disability and Social Exclusion Dynamics in Italian Households," MPRA Paper 42445, University Library of Munich, Germany.
    5. Ali, Zulfiqar, 2014. "Economic Costs of Disability in Bangladesh," Bangladesh Development Studies, Bangladesh Institute of Development Studies (BIDS), vol. 37(04), pages 17-33, December.
    6. Kuklys, W. & Robeyns, I., 2004. "Sen’s Capability Approach to Welfare Economics," Cambridge Working Papers in Economics 0415, Faculty of Economics, University of Cambridge.
    7. Wilkinson-Meyers, Laura & Brown, Paul & McNeill, Robert & Patston, Philip & Dylan, Sacha & Baker, Ronelle, 2010. "Estimating the additional cost of disability: Beyond budget standards," Social Science & Medicine, Elsevier, vol. 71(10), pages 1882-1889, November.
    8. Paul Anand, 2005. "Introduction," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 74(1), pages 1-8, October.
    9. Tania Burchardt, 2003. "Being and becoming: Social exclusion and the onset of disability," CASE Reports casereport21, Centre for Analysis of Social Exclusion, LSE.
    10. Rod Hick, 2016. "Between Income and Material Deprivation in the UK: In Search of Conversion Factors," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 17(1), pages 35-54, February.
    11. Daniel Gottlieb & Alexander Fruman, 2011. "A quality-index of poverty measures," Working Papers 239, ECINEQ, Society for the Study of Economic Inequality.
    12. Alin Halimatussadiah & Chaikal Nuryakin & Pyan A. Muchtar & Adriana Bella & Husnul Rizal, 2017. "Mapping Persons With Disabilities (PWDs) In Indonesia Labor Market," Economics and Finance in Indonesia, Faculty of Economics and Business, University of Indonesia, vol. 63, pages 126-149, December.
    13. Shawn Fremstad, 2010. "A Modern Framework for Measuring Poverty and Basic Economic Security," CEPR Reports and Issue Briefs 2010-12, Center for Economic and Policy Research (CEPR).

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