Black French McCauley and Song 2024 — The Effect of Disability Insurance Receipt on Mortality

Summary

Black, French, McCauley, and Song (2024) use random assignment of Social Security Disability Insurance (SSDI) / Supplemental Security Income (SSI) appellants to Administrative Law Judges (ALJs) as an instrument to estimate the causal effect of disability insurance allowance on 10-year mortality. The local average treatment effect (LATE) for marginal appellants is $+2.8$ percentage points (pp) — allowance increases mortality for the healthiest recipients admitted by lenient judges, while reducing mortality for sicker inframarginal recipients. The paper uses marginal treatment effects (MTE) to reconcile these findings: the allowance-mortality relationship is heterogeneous across the latent health distribution, with the sign reversing as one moves from inframarginal (very sick) to marginal (relatively healthy) applicants.

Key Claims

• Design: $N = 610{,}231$ ALJ-stage appellants aged 55–64, 1995–2004, across $1{,}436$ judges within hearing office-day pairs; leave-one-out ALJ allowance rate as instrument.
• LATE: $+2.8$ pp 10-year mortality for marginal appellants (those induced into allowance by a lenient rather than strict judge).
• MTE heterogeneity: Inframarginal applicants (very sick; allowed regardless) experience reduced mortality from allowance; marginal applicants (relatively healthy; allowed only by lenient judges) experience increased mortality. The MTE curve is downward-sloping in the unobservable health index.
• Three channels: (1) Cash income and Medicare/Medicaid coverage ($\approx \$47$k discounted to age 65) reduce mortality via healthcare access; (2) Work disincentives ($-8$ pp employment after 5 years) increase mortality by removing health benefits of work; (3) Medicaid/SSI effects for the poorest applicants.
• Condition heterogeneity: Cancer and respiratory disease applicants (high mortality, high healthcare costs) → allowance reduces or has near-zero effect on mortality (insurance channel dominates). Musculoskeletal applicants (lower mortality, strong work disincentive) → allowance increases mortality (work-disincentive channel dominates).
• Policy implication: Current ALJ allowance thresholds are approximately calibrated correctly — slightly stricter standards would reduce mortality costs at the margin for the marginal applicant pool, but the net welfare effect depends on non-mortality consumption and insurance benefits.
• Comparison to French-Song (2014): Same ALJ judge IV design but focuses on mortality (French-Song studied employment and earnings). Extends the literature by showing allowance has both costs (for marginal) and benefits (for inframarginal) in terms of longevity.

Concepts Introduced or Extended

• Causal Effects of DI Receipt
• DI Beneficiary Mortality
• Marginal Treatment Effect
• Judge Leniency IV

Entities Mentioned

• Bernard Black
• Eric French
• Jae Song
• Jeremy McCauley

Quotes

"We find that disability insurance allowance increases 10-year mortality by 2.8 percentage points for the marginal recipient. This positive LATE masks substantial heterogeneity: allowance reduces mortality for inframarginal, sicker recipients while increasing it for marginal, healthier recipients."

"The insurance and income channels dominate for high-cost conditions (cancer, respiratory disease), while the work-disincentive channel dominates for low-cost conditions (musculoskeletal disorders)."

My Take

This paper is a landmark in the DI causal effects literature because it provides the first credible causal estimate of allowance on mortality while deploying the MTE framework to explain why the LATE is positive even though many recipients plausibly benefit. The MTE decomposition is crucial: a naive reading of the positive LATE as "DI kills people" ignores that the sickest recipients — the true policy-relevant population — experience reduced mortality. The condition-heterogeneity analysis is particularly compelling. A limitation is the 55–64 age restriction (late-career appellants), which limits generalizability to younger disability claimants.