Assistant Professor Manasi Deshpande
October 30, 2019
People who meet certain medical criteria may qualify to receive government-funded disability benefits. But how might those benefits also assist people coping with additional financial circumstances that occur either as a result of or independent of their health status? That’s a question Manasi Deshpande wants to answer.
An assistant professor of economics in the University of Chicago’s Kenneth C. Griffin Department of Economics, Deshpande’s research centers on empirical public finance and labor economics: specifically, the optimal design of social insurance and public assistance programs. Across all her research and teaching, she focuses on three key questions: how do we weigh the cost of these programs in relation to their benefits, how do we ensure that the benefits go to the right people, and how do the programs affect the families of recipients and other members of society?
“We know that these programs have both costs and benefits,” Deshpande said. “However, we need data and methods to quantify both. Economists have for many years focused mostly on the costs of these programs, but understanding their benefits is key to optimal program design. Another important aspect of program design is making sure that benefits reach those most deserving or in need. Sometimes features of a program that we don’t intend to screen people out, like a complicated application process, can end up doing so. We also need to find out how these programs affect families, communities, and labor markets.”
In a recent paper co-authored with Tal Gross, an associate professor at the Questrom School of Business at Boston University, and Yalun Su, a PhD student at UChicago’s Harris School of Public Policy, Deshpande provided evidence on the relationship between disability programs and various aspects of financial distress, such as bankruptcy, foreclosure, eviction, and home sale. Currently, Deshpande is writing a paper with Lee Lockwood, an assistant professor in the Department of Economics at the University of Virginia, focusing on analyzing the Social Security Disability Insurance (SSDI) program from the perspective of broader economic shocks.
“This program is intended to protect people from experiencing shocks to their income due to health, but when you look beyond health shocks, we see that this program is also protecting people against job loss, changes to the family structure such as divorce, and other kinds of shocks,” Deshpande explained. “It’s important to consider the benefits of the program from providing insurance against other kinds of shocks. Although this program may not be the most efficient way to insure non-health shocks, it may be stepping in where other programs fall short.”
Deshpande is utilizing a combination of administration and survey data in her research. The administrative data encompasses all individuals who have applied for and/or received SSDI benefits. The self-reported survey data, which has smaller sample sizes, provides a broader overview of recipients and may include additional information such as their level of education, the resources available to them, etc. By analyzing this data, Deshpande has uncovered additional details about SSDI benefit recipients’ health status along with other shocks like job loss and changes to family structure. A substantial number of benefit recipients, including those with less-severe health conditions, have experienced some sort of adverse life event and often have limited resources to cope with those events. This indicates that the current program provides benefits beyond what recipient health status alone would suggest. However, an important question is whether disability benefits would also create more distortions in behavior, and therefore have higher costs, if non-health-related shocks are considered in the eligibility criteria.
Overall, Deshpande hopes this research will provide a broader understanding of the different types of people disability insurance serves and the various life events the insurance protects against.
“We want to paint a picture of who receives disability benefits and the value of the benefits to them,” Deshpande said. “We don’t have a lot of data on who these recipients are as people. We don’t just care about health; we care about general wellbeing. This research could ultimately provide a more accurate view of how these programs affect quality of life."