Skip to content

Research Paper HEDG Working Papers 10/21

Mental health, work incapacity and State transfers: an analysis of the British Household Panel Survey

Authors

Publication date

2010

Abstract

The UK has experienced substantial increases in the number of individuals claiming work incapacity benefit (IB) and the proportion of people claiming IB for mental health reasons. Following high-profile reports claiming that intervention would cost the State nothing, the Government has increased the availability of psychological therapies. The cost-neutrality claim relied on two statistics: the proportion of IB claimants diagnosed with mental and behavioural disorders; and estimates of the costs to the State of periods on IB. These are cross-sectional associations. We subject these two associations to more rigorous longitudinal analysis using nationally representative data from seventeen waves (1991-2007) of the British Household Panel Survey (BHPS). We model the effect of depression on (a) State transfers and (b) the probability of being on IB whilst controlling for covariates and unobservable heterogeneity. Our results reveal that cross-sectional associations with depression are substantially confounded. The estimated effects of becoming depressed on State transfers reduce by 83% and 88%, and on the probability of claiming IB drop to just 0.4 and 0.7 percentage points, for males and females respectively. We conclude that the stated benefits of reducing depression for the State and for labour market participation have been substantially over-estimated.

Subjects

Disability, Welfare Benefits, and Health

Links

http://www.york.ac.uk/res/herc/documents/wp/10_21.pdf


Related publications

  1. Measuring the impacts of health conditions on work incapacity – evidence from the British Household Panel Survey

    William Whittaker and Matt Sutton

    1. Disability
    2. Welfare Benefits
    3. Health

#514014


Research home

Research home

News

Latest findings, new research

Publications search

Search all research by subject and author

Podcasts

Researchers discuss their findings and what they mean for society

Projects

Background and context, methods and data, aims and outputs

Events

Conferences, seminars and workshops

Survey methodology

Specialist research, practice and study

Taking the long view

ISER's annual report

Themes

Key research themes and areas of interest