Let's be blunt: how recreational marijuana legalization has impacted disability compensation

Social Security disability compensation programs cost the United States hundreds of billions of dollars each year. With the fragile state of funding for Social Security disability benefits, it is important that new laws do not cause drastic budget changes for disability compensation programs. One such state-specific law change that is increasingly prevalent, and that has the potential to impact disability compensation related outcomes, is the legalization of recreational marijuana use. This paper evaluates the impacts of recreational marijuana legalization on Social Security disability compensation applications and allowances using an event study with two-way fixed effects. Data on disability compensation outcomes is drawn from the Social Security Administration's State Agency Monthly Workload dataset from 2001-2021. The findings suggest that recreational marijuana laws have no observable impact on disability compensation applications or allowances. These findings were consistent across both a simple event study, and an event study that evaluates the 12 quarter-year periods prior to, and following, a recreational marijuana legalization in a state.