A Structural Model of Social Security's Disability Determination Process

We estimate a multistage sequential logit model reflecting the structure of the disability determination process of the Social Security Administration (SSA), as implemented by state Disability Determination Services (DDS) agencies. The model is estimated using household survey information exactly matched to SSA records on disability adjudications from 1989 to 1993. Information on health, activity limitations, demographic traits, and work is taken from the 1990 Survey of Income and Program Participation. We also use information on occupational characteristics from the Directory of Occupational Titles, DDS workload pressure, and local area economic conditions from unpublished SSA sources. Under the program provisions, different criteria dictate the outcomes at different steps of the determination process. We find that without the multistage structural approach, the effects of many of the important health, disability, and vocational factors are not readily discernible. As a result, the split-sample predictions of overall allowance rates from the sequential model performed considerably better than the conventional approach based on a simple allowed/denied logit regression.