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Mental Illness and the Demand for Alcohol, Cocaine, and Cigarettes

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  • Henry Saffer
  • Dhaval Dave

Abstract

This article estimates the effect of mental illness on demand for addictive substances, allowing for structural endogeneity and simultaneity between mental illness and addictive consumption. Results show that individuals with a history of mental illness are 26% more likely to consume alcohol, 66% more likely to consume cocaine, and 89% more likely to consume cigarettes. This high-participation group is also price-responsive, although their price elasticities differ somewhat from those without mental illness. The results provide added justification for higher taxes and supply reduction activities. Furthermore, subsidizing the treatment of mental illness can reduce addictive consumption.(JEL I1) Copyright 2005, Oxford University Press.

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  • Henry Saffer & Dhaval Dave, 2005. "Mental Illness and the Demand for Alcohol, Cocaine, and Cigarettes," Economic Inquiry, Western Economic Association International, vol. 43(2), pages 229-246, April.
    • Handle: RePEc:oup:ecinqu:v:43:y:2005:i:2:p:229-246
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    Cited by:

    1. Anna Choi & Dhaval Dave & Joseph J. Sabia, 2019. "Smoke Gets in Your Eyes: Medical Marijuana Laws and Tobacco Cigarette Use," American Journal of Health Economics, MIT Press, vol. 5(3), pages 303-333, Summer.
    2. Thorhildur Ólafsdóttir & Birgir Hrafnkelsson & Tinna Ásgeirsdóttir, 2015. "The Icelandic economic collapse, smoking, and the role of labor-market changes," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 16(4), pages 391-405, May.
    3. Craig A. Gallet, 2014. "Can Price Get The Monkey Off Our Back? A Meta‐Analysis Of Illicit Drug Demand," Health Economics, John Wiley & Sons, Ltd., vol. 23(1), pages 55-68, January.
    4. Karen Smith Conway & Lisa DeFelice Kennedy, 2004. "Maternal Depression and the Production of Infant Health," Southern Economic Journal, John Wiley & Sons, vol. 71(2), pages 260-286, October.
    5. Naci Mocan & Kaj Gittings, 2010. "The Impact of Incentives on Human Behavior: Can We Make it Disappear? The Case of the Death Penalty," NBER Chapters, in: The Economics of Crime: Lessons For and From Latin America, pages 379-418, National Bureau of Economic Research, Inc.
    6. Dhaval Dave & Swati Mukerjee, 2011. "Mental health parity legislation, cost‐sharing and substance‐abuse treatment admissions," Health Economics, John Wiley & Sons, Ltd., vol. 20(2), pages 161-183, February.
    7. Dhaval M. Dave & Muzhe Yang, 2022. "Maternal and fetal health effects of working during pregnancy," Review of Economics of the Household, Springer, vol. 20(1), pages 57-102, March.
    8. Pearl Bader & David Boisclair & Roberta Ferrence, 2011. "Effects of Tobacco Taxation and Pricing on Smoking Behavior in High Risk Populations: A Knowledge Synthesis," IJERPH, MDPI, vol. 8(11), pages 1-22, October.
    9. Inas Kelly & Dhaval Dave & Jody Sindelar & William Gallo, 2014. "The impact of early occupational choice on health behaviors," Review of Economics of the Household, Springer, vol. 12(4), pages 737-770, December.
    10. Benjamin W. Cowan & Zhuang Hao, 2021. "Medicaid expansion and the mental health of college students," Health Economics, John Wiley & Sons, Ltd., vol. 30(6), pages 1306-1327, June.
    11. Henry Saffer, 2014. "Self-regulation and Health," NBER Working Papers 20483, National Bureau of Economic Research, Inc.
    12. Ana I. Balsa & Michael T. French, 2011. "The Impact of Parental Drinking on Children’s Use of Health Care," Documentos de Trabajo/Working Papers 1101, Facultad de Ciencias Empresariales y Economia. Universidad de Montevideo..
    13. Dhaval M. Dave & Muzhe Yang, 2019. "Maternal and Fetal Health Effects of Working during Pregnancy," NBER Working Papers 26343, National Bureau of Economic Research, Inc.
    14. Amnon Levy & João Faria, 2008. "Persistent high ambition and substance abuse: a rationalization of a vicious circle," Journal of Economics, Springer, vol. 94(3), pages 261-274, September.
    15. George L. Wehby & Dhaval M. Dave & Robert Kaestner, 2020. "Effects of the Minimum Wage on Infant Health," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 39(2), pages 411-443, March.
    16. Dhaval Dave & Henry Saffer, 2007. "Risk Tolerance and Alcohol Demand Among Adults and Older Adults," NBER Working Papers 13482, National Bureau of Economic Research, Inc.
    17. Anna Choi & Dhaval Dave & Joseph J. Sabia, 2016. "Smoke Gets in Your Eyes: Medical Marijuana Laws and Tobacco Use," NBER Working Papers 22554, National Bureau of Economic Research, Inc.
    18. Dave, Dhaval & Saffer, Henry, 2008. "Alcohol demand and risk preference," Journal of Economic Psychology, Elsevier, vol. 29(6), pages 810-831, December.
    19. Padmaja Ayyagari & Partha Deb & Jason Fletcher & William T. Gallo & Jody L. Sindelar, 2009. "Sin Taxes: Do Heterogeneous Responses Undercut Their Value?," NBER Working Papers 15124, National Bureau of Economic Research, Inc.
    20. Lacruz, Ana Isabel Gil & Lacruz, Marta Gil, 2010. "Does alcohol consumption reinforce mental problems in adolescence?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(2), pages 223-232, April.
    21. Chatterji, Pinka & Dave, Daval & Kaestner, Robert & Markowitz, Sara, 2004. "Alcohol abuse and suicide attempts among youth," Economics & Human Biology, Elsevier, vol. 2(2), pages 159-180, June.

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