An Economic Evaluation Framework for Government-Funded Home Adaptation Schemes: A Quantitative Approach

Abstract

The ability to live independently plays a crucial role in the mental and psychological wellbeing of the disabled. To achieve this goal, most governments spend a substantial budget on home adaptation projects. It has been observed that schemes with different target clients (residents versus landlords) are different in efficiency and effectiveness. To understand why and how these schemes differ in performance, this paper develops and applies a generic economic evaluation framework for government-funded home adaptation schemes. Based on the individual-level surveys collected in the United Kingdom, an empirical model was formulated to quantify the determinants for various performance indicators, including money costs, time costs and client satisfaction. Robust estimation procedures were applied to deal with the heteroscedasticity and outlier problems in the data. Results showed that a specialized independent living scheme dedicated to disability adaptations (e.g., the Physical Adaptations Grant, PAG) had higher efficiency and effectiveness than general-purpose schemes (e.g., the Disabled Facilities Grant, DFG), because the funds were provided to the landlords who had a stronger motivation to minimize the time cost in the short run and maximize the future rent potential in the long run. A “unified system” approach to adaptations should be a guiding principle for policy development, regardless of who actually delivers the service.