New issue brief: “Why Did Disability Allowance Rates Rise in the Great Recession?”

The Center for Retirement Research at Boston College has released a new Issue in Brief:

“Why Did Disability Allowance Rates Rise in the Great Recession?”

by Norma B. Coe and Matthew S. Rutledge

The brief’s key findings are:  

• In most recessions, Disability Insurance (DI) application rates go up and allowance rates ­go down.
• The hypothesis for a decline in allowance rates is that individuals with a borderline health problem are more likely to apply when times are bad.
• In the Great Recession, DI application rates went up and allowance rates also rose.
• This outcome is puzzling because the analysis confirmed that applicants were healthier than during the previous expansion.

Perhaps the answer is that the severity of the Great Recession changed award standards or made it easier for applicants to prove their job prospects were poor.

This brief is available here.