Estimating the Extra Costs of Disability: Implications for Poverty Measurement and the Analysis of Disability-Related Decommodification in Advanced Welfare States

Background and Purpose: It is widely accepted that people with disabilities incur additional expenditure on transport, heating, equipment and other items. In this article, we provide the first cross-national estimates of the magnitude of these extra costs for adults with disabilities age 50-65 across 12 advanced economic countries using ex-ante harmonized data from the Survey of Health Aging and Retirement in Europe. 

Methods: Drawing on the established Standard of Living approach, we compare the incomes required by households with and without adults with disabilities to obtain the same standard of living. The extra costs are calculated by way of a regression based model that estimates the additional amount of income a household with a member with disabilities would need to achieve the same standard of living (e.g. the ability to make ends meet) as an equivalent household without a member with a disability.

Results: The extra costs of disability in the OECD countries studied are around 45% of income for a household with an adult reporting a work-disability and 29% of income for a household with an adult who receives disability benefits. Applying an equivalisation scale based on these figures increases the overall poverty incidence rate (using a poverty line of 60% of median income). Disability benefit recipients, moreover, experience considerable extra costs of living despite receiving income replacements, which suggests the limited disability-related decommodification achieved in the advanced welfare states.

Conclusions and Implications: The important finding, which confirms the findings of previous studies, is that the extra costs of disability are substantial in all countries studied with considerable variations identified among different household types, with individuals with more serve health conditions, and across countries. This information on the extra costs that people with disabilities encounter across the advanced economic countries can be useful for policy makers who can better understand the limitations of current disability support programs at providing people with disabilities with a decent standard of living.