http://www.iser.essex.ac.uk/publications/working-papers/iser/2009-19

In the UK, state support for older people with disabilities comes in two forms: meanstested help with the costs of specific care services arranged by local authorities; and non-means-tested cash benefits, which include the system of Attendance Allowance (AA). The recent Wanless inquiry into this system proposed some re-direction of resources from cash benefits into care services. That proposal raises the question of how effective are cash benefits as a form of disability support for the pensioner population. This study examines the working of the AA system, with the aim of understanding better the problems of targeting raised by the failure of some disabled pensioners to bring forward potentially successful AA claims, because of the ‘hassle’ or ‘stigma’ of benefit claims, or because disability itself reduces individuals’ capacity to derive benefit from additional cash income. The paper shows theoretically that barriers of this kind may counteract the tendency for increasing disability to raise the probability that the individual will choose to make a claim for AA. The empirical analysis combines household-level survey data on family circumstances, disability and receipt of AA with aggregate administrative data on the average success rate for AA claims, to analyse the factors influencing individuals’ probabilities of claiming and their chances of success. The paper also gives estimates of the range of possible values for the proportion of over-65s who have an unpursued, but potentially successful, claim for AA. There are two main findings. First, the probability of an individual pensioner making a claim for AA appears to rise strongly with his or her degree of disability, irrespective of personal and household circumstances. This suggests that claim costs do not rise with disability (at least not sufficiently to negate the value of the benefit) and that disability does not seriously impair the capacity to benefit from additional cash income. Therefore, cash benefits appear to make an effective contribution to the system of support for disabled older people. Second, there is evidence of a substantial volume (possibly 30% or more of the over-65 household population) of unpursued but potentially successful AA claims. This estimate suggests that the reluctance of older people to claim disability benefit plays at least as large a part in restraining public expenditure on disability benefits as does the claim adjudication system.

We investigate the processes underlying payment of Attendance Allowance (AA) in the older UK population, using a partial identification approach. Receipt of AA requires that (i) a claim is made and (ii) programme administrators assess the claim as warranting an award. These processes cannot be analysed directly because we observe neither potentially successful unpursued claims, nor rejected claims. Combining survey data with weak prior restrictions and aggregate information on claim success rates, we are able to distinguish clearly the behaviour of potential claimants and assessors. Results suggest that there are many potentially successful AA claims which are not pursued. Working Paper 2009-19 2009-06-25 Stephen Pudney Institute for Social and Economic Research spudney@essex.ac.uk http://www.iser.essex.ac.uk/home/spudney