ECONOMIC EFFECTIVENESS: Supplemental Security Income Program 1984 vs. 1999

ECONOMIC EFFECTIVENESS: Supplemental Security Income Program 1984 vs. 1999 Teran Martin Colorado College Department of Economics Teran_Martin@Alumni.ColoradoCollege.edu

Supplemental Security Income Means-tested transfer program Benefits the needy aged (65+), blind, and disabled Targets individuals without significant work experience unable to engage in substantial gainful activity Program Background

Legislative History • The Social Security Disability Benefits Reform Act of 1984 • Supreme Court case 493 US 521, Sullivan v. Zebley • The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 • The Americans with Disabilities Act and Fair Housing Act

Data • Survey of Income and Program Participation matched to SSA administrative records • 795 SSI observations in the 1984 SIPP-SSA matched data file • 1,100 SSI observations in the 1999 SIPP-SSA matched data file

Data Tests • Equality of means test (Ho: 1999 = 1984) • Can reject Ho at the α = .01 confidence level for most of the variables • Econometric modeling • Age, Marital Status, Own Home are statistically significant in determining the amount of SSI benefits • Chow test indicates that the 1984 and 1999 regression lines are statistically different • Statistical analysis of demographic, income and poverty status characteristics

Demographic Characteristics • Major changes in marital status • % widowed decreased; % divorced/separated and never married increased • Decrease in average age • Substantial growth in disability component • Increase in educational attainment • Most still have high school education or less • % female decreased • % Hispanic increased

Income • Increase in the % of beneficiaries with recent work experience • Changes in the composition of family income • Social Security income less important • Earnings more important • Mean personal and family income increased

Poverty Status • Poverty rate decreased by 5.4 percentage points • SSI benefits were less effective in reducing the poverty gap in 1999 • Increase in the reduction of the poverty gap for those under 18

What do these results tell us? • More or less effective? • Policy implications?

Effectiveness Definition • Cost - benefit analysis not applicable • “The extent to which a goal or set of goals is achieved” (Quade 1989)

Program Goals/Principles • Provide: • Nationally uniform eligibility requirements and benefit standards • An assistance source of last resort • Incentives and opportunities for those beneficiaries to work or reduce their dependency on public assistance • An efficient and economical method of providing assistance • Inducements to for states to provide supplementation • Appropriate coordination of the SSI program with other programs

More Effective • Provided more uniform eligibility across categories • Granted a larger student income exclusion • Required states to pass along the annual increase in benefits to account for inflation • Increased the total number of beneficiaries • Included more beneficiaries that had worked in the previous one to three years, received Food Stamp, housing and energy assistance • Reduced the proportion living in the 50-125 percent of the poverty threshold

Less Effective • Not as able to target low income individuals • Decreased proportion of SSI beneficiaries participating in medical assistance programs • Slightly less proportional reduction in the poverty gap was

Conclusions • Overall, more effective in 1999 • Policy implications • Closely Examine characteristics that indicated the SSI program was less effective in 1999 • Increase early intervention type programs

ECONOMIC EFFECTIVENESS: Supplemental Security Income Program 1984 vs. 1999