Estimating the Extra Costs of Disability in the United States: Evidence from Four Nationally Representative Surveys

Background/Purpose: People with disabilities must spend money on extra items, such as on caregivers, out of pocket medical care, and assistive technologies, that those without disabilities do not require (Zaidi and Burchardt, 2005; Braithwaite and Mont, 2009). Though these extra costs have been estimated in other advanced economic countries (Mitra et al, 2017), they have yet to be rigorously estimated in the United States. Therefore, the purpose of this study is to estimate the extra costs of living with a disability in the United States.

Methods: We drew on the “expenditure equivalence” approach to estimating the extra costs of disability (Berthound, 1991; Zaidi and Burchardt, 2005), which has been widely adopted in the international research literature (see, Mitra et al 2017). We analyze data on adults ages 18-69 years old from the 2015 and 2018 National Financial Capability Study, the 2018 U.S. Financial Health Pulse Survey, the 2016 Financial Well-Being Survey, and the 2018 Survey of Household and Economic Decision-making. OLS regression is used to estimate the additional expenditures that an adult with a disability must incur in order to obtain the same standard of living as a comparable household without an adult with a disability. Composite indicators of material hardship were used as the measures of standard of living. An analysis of the correct specifications of income with differing functional forms (i.e., linear, quadratic, square root, and logarithmic) was conducted and we reported the model with the best fit.

Results: The total sample consisted of 60,765 working-age adults (18-69) across all four surveys, including 3,834 people with self-reported work-disabilities. We estimate that a household containing an adult with a work-disability requires, on average, 28% more income (or an additional $17,750 a year at the median household income) to obtain the same standard of living as a comparable household without a member with a work-disability. In addition to the work-disability measure, we estimate the extra costs for adults who report one or more activity limitations at 35% more income or an additional $22,112 a year. We further calculated disability-adjusted poverty rates using the March 2019 Current Population Survey. We find that the rate of poverty at the Federal Poverty Level for households with an adult with a work-disability rises from 24% to 35% of households after adjusting for the extra costs of disability.

Conclusions and Implications: Drawing on four nationally representative surveys, this paper provides estimates of the extra costs experienced by adults living with disabilities in the United States. This information can provide policy makers a more accurate determination of the needs of people with disabilities. The findings of the paper suggest that the costs of living with a disability in the U.S. are substantial and that the current measures of poverty used, which fail to adjust for these necessary costs, likely understate the true level of deprivation experienced among adults with disabilities in the United States.