Why You Don’t Invite Actuaries Into Your Angry Mob

Most reporting on Social Security’s disability programs provides more opinion than fact, more heat than light.  Let us … walk into the light … into the numbers, the demographics, the economics … into … actuarial science.

Stephen C. Goss is the Chief Actuary of the Social Security Administration – the actual number cruncher for Social Security.  On March 14, 2013, he testified before the House of Representative Ways and Means Committee’s Subcommittee on Social Security regarding the Social Security Disability Insurance Benefits program.  Mr. Goss testified on several topics including the “drivers” of increasing costs over the past several decades, and the projected financial status of the Disability Insurance Trust Fund into the future – two topics causing a great deal of heat in the press, and, anxiety in the public.

It’s important to note that way back in 1995 the Social Security Administration’s Office of Chief Actuary estimated that the Social Security Disability Insurance program would be solvent through 2016.  And they were right on the money – to the year.  The Office of Chief Actuary knows what it’s talking about.

Mr. Goss documented that indeed, the number of disabled worker beneficiaries increased from 2.86 million in 1980 to 8.20 million in 2010 – an increase of 187%.

What?!?!  187%?!?!  That’s a huge number!   Everybody freak out!    Run around screaming … … banging pots and pans!  FRAUD!  FRAUD!  Judges are too lax!!!   Flap your arms!  Danger Will Robinson!  Danger!

But, that boring Mr. Goss ruined all the fun.  Just like an … actuary.   He went on to explain the bigstock-Accountant-With-Abacus-37671250tedious factors contributing to the increase in disabled beneficiaries – things like a 41% increase in the total population; a marked increase of women in the workforce who pay Social Security payroll taxes who are “insured” for disability benefits; that huge swell of Baby Boomers getting older, and developing disabling health conditions, and the recession.  That’s why you don’t invite actuaries into your angry mob.

In a recent article by Eric Boehm published in the PA Independent, Expert:  Social Security disability program ‘backdoor welfare,‘ and cited in several other articles around the country, Tad DeHaven of the libertarian think tank, the Cato Institute is quoted as saying that “he’s never seen [a government program] as ill-defined and exploited” as the Social Security disability trust fund and that “[i]t is so obviously abused.”   But, Mr. DeHaven gives no objective information in support of that conclusion; nothing with which the reader might also draw the same conclusion.  It is also not clear under what criteria Mr. DeHaven is deemed an “expert.”   No light.  Just heat – definitely heat.

I spare a thought for journalists working under pressure of deadline attempting to write about terribly complicated, dicey, and consequential programs.  The information is extremely complex – Mr. Goss’ testimony before the Social Security subcommittee was replete with charts and graphs, facts, and figures, relying on statistical analyses that are beyond the mere mortal.  It’s cumbersome and tedious, but it’s important to get it right.

Mr. Goss counsels that demographic changes, principally the drop in the birth rate after the Baby Boom, has increased the cost of the Disability Insurance Benefits program as a percent of taxable payroll (and as a percent of Gross Domestic Product).  While testifying, he went on to explain that the trends have stabilized, or are expected to do so in the future.  He acknowledged that projections of the numbers of Disability Insurance beneficiaries will increase, but at the same rate as the rate of workers, and so the projections are for stability in the future.

More light, less heat.

 

2 thoughts on “Why You Don’t Invite Actuaries Into Your Angry Mob

  1. Steve

    My favorite part of Boehm’s article was when he insisted that since the states don’t pay most of the benefits, the “state-run” appeals system has no incentive not to pay people. He literally couldn’t be bothered to look up who handles the appeals. I work for that appeals system and last time I checked, my paycheck came from the US Treasury. But what do I know.

    Reply
    1. disabilitydunktank Post author

      Yes, Boehm’s article was one terribly sloppy and slapdash piece of nonsense. Golly.

      Reply

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