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Earning and Conversion Handicaps and the Welfare Economics of Disability

Published online by Cambridge University Press:  23 February 2012

Luke B. Connelly*
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.
*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.


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.

Copyright © Cambridge University Press 2008

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