Measuring Disability Status and Older People’s Receipt of Disability Benefits in British Household Surveys: a Latent Variable Structural Equation Approach

ABSTRACT: Targeting efficiency of disability-related social security benefits in the UK is under debate: it has been argued that a substantial proportion of those who receive Attendance Allowance (AA), the main disability benefit available to older people, are not disabled and/or have relatively high incomes. We compare the pattern of receipt of AA in three data sources: the British Household Panel Survey, the English Longitudinal Study of Ageing and the Family Resources Survey. We develop and estimate via robust maximum likelihood a structural equation model in which probabilities of receiving AA depend on a latent disability status indicator – measured by survey-specific self-reported functional limitations indicators – and a set of observable socio-economic characteristics. Results indicate that the probability of being in receipt of AA is clearly disability-related and negatively associated with economic resources. While the comparison of the conditional distribution of AA among surveys might be biased by survey features affecting each sample composition, once this is controlled for through statistical matching, the three surveys still deliver similar results in term of the disability and socio-economic gradient in AA receipt