Articles

Earning and Conversion Handicaps and the Welfare Economics of Disability

Luke B. Connelly^a1 c1

^a1 Centre of National Research on Disability and Rehabilitation Medicine (CONROD), Australian Centre of Economic Research on Health (UQ Node) and School of Economics, The University of Queensland. l.connelly@uq.edu.au

Abstract

Sen (2004) has distinguished between two types of handicap that are commonly associated with disabilities, viz. an ‘earning handicap’ and a ‘conversion handicap’. In this article, these concepts are considered, extended, and developed conceptually within the framework of a Grossman-type model. This model is then used to consider how the welfare implications of disability and the attendant handicaps may be conceived. A utilitarian framework of the kind associated with conventional welfare economics is invoked, but extra-welfarist-type policies are also discussed. The article shows how the concepts of disability and handicap may be given a tractable conceptual economic basis, and how the welfare effects of social policies towards people with disabilities can usefully be analysed within the resulting framework.

Keywords:

• disability;
• earning handicap;
• conversion handicap;
• economics

Correspondence:

^c1 Address for correspondence: Luke B. Connelly, Associate Director, Centre of National Research on Disability and Rehabilitation Medicine (CONROD), Mayne Medical School, Herston Road, Herston QLD 4006, Australia.