Disability costs and equivalence scales in the older population

Abstract

We estimate the implicit disability costs faced by older people, using
data on over 8,000 individuals from the UK Family Resources Survey. We extend
previous research by using a more flexible statistical modelling approach and by
allowing for measurement error in observed disability and standard of living
indicators. We find that disability costs are strongly related to the severity of
disability and to income and – at an average level of almost £100 per week among
over-65s with significant disability – they typically far exceed the value of any state
disability benefits received.