Essays on the Effects of Social Insurance for Disability

This dissertation examines how social insurance, family support and work capacity enhance individuals' economic well-being following significant health and income shocks. I first examine the extent to which the liquidity-enhancing effects of Worker's Compensation (WC) benefits outweigh the moral hazard costs. Analyzing administrative data from Oregon, I estimate a hazard model exploiting variation in the timing and size of a retroactive lump-sum WC payment to decompose the elasticity of claim duration with respect to benefits into the elasticity with respect to an increase in cash on hand, and a decrease in the opportunity cost of missing work. I find that the liquidity effect accounts for 60 to 65 percent of the increase in claim duration among lower-wage workers, but less than half of the increase for higher earners. Using the framework from Chetty (2008), I conclude that the insurance value of WC exceeds the distortionary cost, and increasing the benefit level could increase social welfare. Next, I investigate how government-provided disability insurance (DI) interacts with private transfers to disabled individuals from their grown children. Using the Health and Retirement Study, I estimate a fixed effects, difference in differences regression to compare transfers between DI recipients and two control groups: rejected applicants and a reweighted sample of disabled non-applicants. I find that DI reduces the probability of receiving a transfer by no more than 3 percentage points, or 10 percent. Additional analysis reveals that DI could increase the probability of receiving a transfer in cases where children had limited prior information about the disability, suggesting that DI could send a welfare-improving information signal. Finally, Zachary Morris and I examine how a functional assessment could complement medical evaluations in determining eligibility for disability benefits and in targeting return to work interventions. We analyze claimants' self-reported functional capacity in a survey of current DI beneficiaries to estimate the share of disability claimants able to do work-related activity. We estimate that 13 percent of current DI beneficiaries are capable of work-related activity. Furthermore, other characteristics of these higher-functioning beneficiaries are positively correlated with employment, making them an appropriate target for return to work interventions.

Functional Neuroimaging of the Social Regulation of Emotion in Schizophrenia

Negative symptoms in schizophrenia are characterized by deficits in normative experiences and expression of emotion. Social anhedonia (diminished pleasure from social experiences) is one negative symptom that may impact patients’ motivation to engage in meaningful social relationships. Past research has begun to examine the mechanisms that underlie social anhedonia, but it is unclear how this lack of social interest may impact the typically positive effects of social buffering and social baseline theory whereby social support attenuates stress. The present pilot study examines how social affiliation through hand holding is related to subjective and neural threat processing, negative symptoms, and social functioning. Twenty-one participants (14 controls; 7 schizophrenia) developed social affiliation with a member of the research staff who served as the supportive partner during the threat task. Participants displayed greater subjective benefit to holding the hand of their partner during times of stress relative to being alone or with an anonymous experimenter, as indicated by self-reported increased positive valence and decreased arousal ratings. When examining the effects of group, hand holding, and their interaction on the neurological experience of threat during the fMRI task, the results were not significant. However, exploratory analyses identified preliminary data suggesting that controls experienced small relative increases in BOLD signal to threat when alone compared to being with the anonymous experimenter or their partner, whereas the schizophrenia group results indicated subtle relative decreases in BOLD signal to threat when alone compared to either of the hand holding conditions. Additionally, within the schizophrenia group, more positive valence in the partner condition was associated with less severe negative symptoms, better social functioning, and more social affiliation, whereas less arousal was correlated with more social affiliation. Our pilot study offers initial insights about the difficulties of building and using social affiliation and support through hand holding with individuals with schizophrenia during times of stress. Further research is necessary to clarify which types of support may be more or less beneficial to individuals with schizophrenia who may experience social anhedonia or paranoia with others that may challenge the otherwise positive effects of social buffering and maintaining a social baseline.