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

Zaidi, Asghar and Burchardt, Tania (2003) Comparing incomes when needs differ: equivalisation for the extra costs of disability in the UK. CASEpaper, CASE/64. Centre for Analysis of Social Exclusion, London School of Economics and Political Science, London, UK.

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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.

Item Type: Monograph (Discussion Paper)
Official URL: http://sticerd.lse.ac.uk/case
Additional Information: © 2003 Asghar Zaidi and Tania Burchardt
Library of Congress subject classification: H Social Sciences > HN Social history and conditions. Social problems. Social reform
H Social Sciences > HD Industries. Land use. Labor
Sets: Departments > Social Policy
Research centres and groups > ESRC SAGE: Simulating Social Policy for an Ageing Society
Collections > Economists Online
Research centres and groups > Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD)
Research centres and groups > Centre for Analysis of Social Exclusion (CASE)
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Identification Number: CASE/64
Date Deposited: 03 Jul 2008 09:13
URL: http://eprints.lse.ac.uk/6373/

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