Racial and Ethnic Differences in the Consumption of Disability Insurance Beneficiaries

Recent research has shown that consumption provides useful information about the well-being of households. In this paper, I compile Consumer Expenditure Survey (CE Survey) data from 2010 to 2019 in order to examine the consumption patterns of households with Social Security Disability Insurance (DI) beneficiaries that differ in terms of their race or ethnicity. I compare the groups in terms of a wide variety of outcomes, including post-tax income, total expenditure, and expenditure on food, health care and housing. There are important differences based on the race and ethnicity of households. Black and Hispanic households with DI beneficiaries have consistently lower levels of income than White households with DI beneficiaries. Furthermore, the racial gaps are more persistent in terms of expenditure than for income. Any evidence of progressive DI replacement rates or other elements protecting lower-income Black and Hispanic households in terms of income disappears using household expenditure. The total average expenditure of Black DI Households is approximately 30 percent lower than of White DI Households, whereas it is 18 percent lower when using post-tax income. Hispanic DI Households do slightly better than Black DI Households on this measure, although they have average expenditure that is around 25 percent lower than White DI Households (instead of 18 percent lower in terms of post-tax income). There is also evidence an increasing divergence in the expenditure of DI and Non-DI households for all racial groups.