The Effect of State Funeral Regulations on Cremations Rates: Testing for Demand Inducement in Funeral Markets

This article presents evidence that state funeral regulations affect the choice of whether to cremate or bury dead bodies. States that require either funeral directors to be embalmers or funeral homes to have embalming preparation rooms have lower cremation rates, holding other factors such as income, age, educational attainment, nativity, religious adherence, race, and region constant. These embalming regulations reduce cremation rates by roughly 16 percent, which increases the amount spent on funerals by 2.6 percent. The article also presents evidence that funeral directors induce consumers to choose burial over cremation, which supports one of the fundamental premises underlying the Federal Trade Commission's Funeral Rule. However, the additional evidence that inducement is more prevalent in states with stringent funeral regulations suggests that repealing state regulations that impede competition might be more effective than the Funeral Rule in attacking the problem of demand inducement. Copyright 2002 by the University of Chicago.