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The Impact of Disability on Earnings: Results of the Health and Activity Limitation Survey

by Christopher Bruce, Derek Aldridge, & Kris Aksomitis

This article was originally published in the Spring 2000 issue of the Expert Witness.

The 1991 Census of Canada contained two questions that asked whether respondents considered themselves to be "disabled." Using the answers to this question (and the answers to a second, preliminary survey), Statistics Canada was able to create a file of approximately 34,000 individuals that it considered to be disabled. These individuals were then asked to complete a lengthy, detailed questionnaire, known as the Health and Activity Limitation Survey, or HALS. Another (approximately) 100,000 non-disabled individuals were asked to complete a less detailed questionnaire.

As the HALS questions concerned factors such as health, income, and education, it held great promise for use in personal injury litigation. Indeed, it is possibly the most extensive and reliable study of the disabled that has ever been conducted (not just in Canada, but worldwide). And one does see allusions to HALS data in many experts’ reports. But, for various statistical reasons, the data that have been released by Statistics Canada have proven to be less valuable than might have been hoped. As a result, to those of us working in the field of damage assessment, HALS has been a great disappointment.

Economica recently obtained a copy of the answers provided by each of the respondents to the HALS survey. From these data we have extracted a number of statistics that we believe will be of interest to the personal injury litigation community. Although we cannot hope to resolve all of the problems previously associated with HALS data in this short article, it is our expectation that the data presented here will, nevertheless, be of value.

Earnings

We have obtained earnings data for both males and females, divided into four age groups, four education levels, and four levels of severity of disability; that is, for 128 categories in total. (128 = 2 x 4 x 4 x 4). For each of these 128 categories we calculate three figures:

We present these data in Tables 1a & 1b (pages 5 & 6). Figures are shown for each of the four education levels: less than high school, high school, college or trade certificate, and university. As one would have expected, in each category earnings rise as one moves from non-disabled through mildly, moderately, and severely disabled. (We define "mild," "moderate," and "severe" disability in an Appendix to this article, thus allowing readers to determine to which of those categories individual plaintiffs belong.)

In virtually all categories, it is seen that the predicted effect that disability will have on earnings is lower if it is known that the individual will be working than if it is not known whether he or she will be able to work. That is, the earnings of the disabled are a higher percentage of the earnings of the non-disabled among the working population than they are among the total population. This is because a higher percentage of the disabled than the non-disabled earn no income.

For example, among males aged 35–44 with a high school education, those with a "moderate" disability earned 68 percent as much as the non-disabled if they earned anything at all. But 38 percent of the moderately disabled individuals in this age/sex/education group reported that they had no earnings, whereas only 6 percent of the non-disabled reported that they had no earnings. Thus, inclusion of those with zero earnings in the earnings figures had a much greater impact on the average earnings of the disabled group than similar inclusion had on the average earnings of the non-disabled. The result is that the earnings of all moderately disabled individuals in this group were only 45 percent of those of all non-disabled individuals.

Charts 1a & 1b (pages 7 & 8) offer a graphical depiction of the data shown in the tables – and allow the reader to more easily observe the overall trend implied by the data.

Education

The earnings data reported in Tables 1a & 1b may underreport the effect of disability on earnings. The reason for this is that the disabled have lower education levels than do the non-disabled. If these lower levels result from the disability, then disability will have two effects: reducing earnings at each education level (Tables 1a & 1b) and reducing education levels.

In Table 2 (page 9), we report the distribution of education levels among the four categories of disability. It is seen in that Table that there is a higher percentage of university graduates among the non-disabled than among the disabled in every category; and a lower percentage of individuals who have not completed high school among the non-disabled than among the disabled in most categories. An interesting result is that mildly disabled males are much more likely than non-disabled males to have a college education or trade certificate. (However, this could occur if individuals with this level of education had a high probability of incurring injuries that caused mild disabilities.)

Conclusion

The tables and charts presented in this article suggest that the incomes of the disabled are lower than those of the non-disabled for at least three reasons: the disabled earn less when they work, even if they have the same levels of education as the non-disabled; the disabled are less likely to earn any income than the non-disabled; and the disabled have lower levels of education than do the non-disabled.

However, although the data presented here may be of some interest to personal injury litigants, the level of aggregation is so great that it seems unlikely that these data will be able to provide more than background information to the litigation process.

Appendix: Determination of the Degree of Disability

The purpose of this Appendix is to allow readers to determine whether Statistics Canada would classify a particular plaintiff’s disabilities as "mild," "moderate," or "severe."

Statistics Canada asked 25 questions (see below), grouped into four categories. In the first category, the respondent was allocated a "score" of 0 if he or she answered "no," a 1 if he/she answered "yes, but able," and a 2 if he/she answered "yes, unable." For example, the individual was allocated a 1 if he/she had difficulty hearing what was said in a conversation with one other person; and a 2 if he/she was unable to hear what was being said in such a conversation.

In the second category, the individuals were allocated a score of 1 if they answered "yes" to the question. (For example, "do you have difficulty with your ability to remember?")

In the third category, individuals were shown a list of activities. If they were limited in their ability to engage in one of the activities they were allocated a score of 1; if they were limited in more than one of the activities they were allocated a score of 2.

Finally, individuals who had been diagnosed as legally blind received a score of 2.

The scores for all 25 questions were summed and individuals were allocated to the relevant levels of disability on the basis of their total scores. The scales used were:

LEVEL RANGE
Mild 1–4
Moderate 5–10
Severe 11–43

It will be apparent that these are very imprecise categorisations. For example, using Statistics Canada’s scale, both an individual who was legally blind and an individual with a weak back would be categorised as "moderately" disabled, even though a reasonable a priori expectation is that those disabilities would affect individuals’ earning capacities quite differently. Similarly, both paraplegics and quadriplegics would be categorised as "severely" disabled, even though, again, we know that those disabilities have quite different effects on earnings.

I. In this category, individuals receive 1 each time they indicate that they have difficulty with the activity, but are able to undertake it ("yes, but able"); and 2 each time they indicate that they have difficulty with the activity and are unable to undertake that activity ("yes, unable").

1. Do you have difficulty hearing what is said in a conversation with

1.1 One other person?

1.2 A group of at least three other people?

2. Do you have any difficulty seeing the following when you wear your ordinary glasses or contact lenses?

2.1 Newsprint?

2.2 The face of someone across a room?

3. Do you have any difficulty speaking and being understood?

4. Do you have any difficulty:

4.1 Walking 350 metres without resting?

4.2 Walking up and down a flight of stairs?

4.3 Carrying an object of 4.5 kg for 10 metres?

4.4 Moving from one room to another?

4.5 Standing for more than 20 minutes?

5. When standing, do you have any difficulty bending down and picking up an object from the floor (e.g. a shoe)?

6. Do you have any difficulty

6.1 Dressing and undressing yourself?

6.2 Getting in and out of bed?

6.3 Cutting your own toenails?

6.4 Using you fingers to grasp or handle (such as using scissors)?

6.5 Reaching in any direction (e.g. above your head)?

6.6 Cutting your own food?

II. In this category, the individual receives 1 if he or she responds "yes" and 0 if he/she responds "no."

7. Are you unable to hear what is being said over the telephone?

8. Do you have ongoing difficulty with your ability to remember or learn?

9. Has a teacher or health professional ever told you or a family member that you have a learning disability?

10. In the past, persons who had some difficulty learning were often told they had a mental handicap or that they were developmentally delayed or mentally retarded. Has anyone ever used those words to describe you?

III. In this category, the individual receives 1 if he or she responds "yes" with respect to one of the categories; and 2 if he/she responds "yes" with respect to two or more categories.

11. Because of a long-term physical condition or health problem (i.e. one that is expected to last longer than 6 months) are you limited in the kind or amount of activity you can do

12. Because of a long-term emotional, psychological, nervous, or psychiatric condition, are you limited in the kind or amount of activity you can do

13. Do you feel limited by the fact that a health professional has labelled you with a specific mental health condition, whether you agree with this label or not?

IV. Finally, if the individual had been diagnosed as legally blind, he/she was given a score of 2.

14. Have you been diagnosed by a specialist as being legally blind?

Table 1a: Earnings of disabled individuals compared to earnings of non-disabled individuals

Table 1a

Note: A dash indicates that the category’s sample size is too small to report a statistically reliable estimate.

Table 1b: Earnings of disabled individuals compared to earnings of non-disabled individuals

Table 1b

Note: A dash indicates that the category’s sample size is too small to report a statistically reliable estimate.

Chart 1a: Earnings of disabled males compared to earnings of non-disabled males

Chart 1a

Note: This chart graphically depicts the data shown in Tables 1a and 1b. The top of each bar represents the earnings of disabled males who reported earnings as a percentage of non-disabled males who reported earnings. The bottom of each bar represents the earnings of all disabled males (whether they reported earnings or not) as a percentage of all non-disabled males (whether they reported earnings or not). Where no bar is shown indicates that the category’s sample size is too small to allow us to report an estimate (corresponding to the dash in Tables 1a and 1b).

Chart 1b: Earnings of disabled females compared to earnings of non-disabled females

Chart 1b

Note: This chart graphically depicts the data shown in Tables 1a and 1b. The top of each bar represents the earnings of disabled females who reported earnings as a percentage of non-disabled females who reported earnings. The bottom of each bar represents the earnings of all disabled females (whether they reported earnings or not) as a percentage of all non-disabled females (whether they reported earnings or not). Where no bar is shown indicates that the category’s sample size is too small to allow us to report an estimate (corresponding to the dash in Tables 1a and 1b).

Table 2: The distribution of education levels among the four categories of disability

Table 2

leaf

Christopher Bruce is the President of Economica and a Professor of Economics at the University of Calgary. He is also the author of Assessment of Personal Injury Damages (Butterworths, 2004).

Derek Aldridge is a consultant with Economica and has a Master of Arts degree (in economics) from the University of Victoria.

Kris Aksomitis was a research associate with Economica and an MA student in Economics at the University of Calgary.

Overview

This article presents some information from Statistics Canada’s Health and Activity Limitation Survey (HALS). Although HALS was one of the most comprehensive surveys ever conducted on the effects of disability, Statistics Canada has chosen to publish results from that survey in a form that is not of great value to litigators. Accordingly, HALS has become one of those sources that is referred to far more often than it is employed.

Economica has obtained access to Statistics Canada’s electronic records of over 100,000 individual questionnaires from HALS. This has allowed us to estimate income and education levels for each of four levels of disability, for both males and females, cross-categorised by four levels of education and four age groups. In their article, Christopher Bruce, Derek Aldridge, and Kris Aksomitis report the statistics derived from this process. Although the statistics reported there are too aggregated to allow practitioners to estimate damages in specific cases, they can act as a check to see whether the damages calculated in any particular case are "reasonable."

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