Disability Insurance: Error Rates and Gender Differences

We show the extent of errors made in the award of disability insurance using matched survey-administrative data. False rejections (Type I errors) are widespread and characterized by large gender differences. Women with a severe, work-limiting, permanent impairment are 20 percentage points more likely to be rejected than men, controlling for the type of health condition, occupation, and a host of demographic characteristics. The differences by gender arise because women are more likely to be assessed as being able to find other work than observationally equivalent men. Despite this, after rejection, women with a self-reported work limitation do not return to work, compared to rejected women without a work limitation. We investigate whether these gender differences in Type I errors are due to women being in better health than men, to women having lower pain thresholds, to women applying more readily for disability insurance, or to women applying with harder-to-verify work limitations. None of these explanations are consistent with the data. By contrast, we find evidence suggesting that there are different acceptance thresholds for men and women.