ECONOMIC EFFECTIVENESS: Supplemental Security Income Program 1984 vs Teran Martin Colorado College Department of Economics

Program Background 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

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 (H o :  1999 =  1984 ) Can reject H o 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 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