IDEAS home Printed from https://ideas.repec.org/a/ucp/jlstud/v35y2006p175-198.html
   My bibliography  Save this article

Subsidizing Addiction: Do State Health Insurance Mandates Increase Alcohol Consumption?

Author

Listed:
  • Jonathan Klick
  • Thomas Stratmann

Abstract

A model of addiction in which individuals are forward looking implies that as the availability of addiction treatment options grows, individuals will consume more of an addictive good. We test this implication using cross-state variation in the adoption of mental health parity mandates that include substance abuse treatments. We examine the effects of these mandates on the consumption of alcohol and find that parity legislation leads to an increase in alcohol consumption. To account for the possible endogeneity of the adoption of mental health parity mandates, we perform an instrumental variables analysis and find that the ordinary least squares estimation significantly underestimates the insurance effect on alcohol consumption.

Suggested Citation

  • Jonathan Klick & Thomas Stratmann, 2006. "Subsidizing Addiction: Do State Health Insurance Mandates Increase Alcohol Consumption?," The Journal of Legal Studies, University of Chicago Press, vol. 35(1), pages 175-198, January.
    • Handle: RePEc:ucp:jlstud:v:35:y:2006:p:175-198
    DOI: 10.1086/498830
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1086/498830
    Download Restriction: Access to the online full text or PDF requires a subscription.
    File URL: https://libkey.io/10.1086/498830?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Joshua D. Angrist & Alan B. Krueger, 2001. "Instrumental Variables and the Search for Identification: From Supply and Demand to Natural Experiments," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 69-85, Fall.
    2. Timothy Besley & Anne Case, 2003. "Political Institutions and Policy Choices: Evidence from the United States," Journal of Economic Literature, American Economic Association, vol. 41(1), pages 7-73, March.
    3. DiNardo, John & Lemieux, Thomas, 2001. "Alcohol, marijuana, and American youth: the unintended consequences of government regulation," Journal of Health Economics, Elsevier, vol. 20(6), pages 991-1010, November.
    4. Peter Arcidiacono & Holger Sieg & Frank Sloan, 2007. "Living Rationally Under The Volcano? An Empirical Analysis Of Heavy Drinking And Smoking," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(1), pages 37-65, February.
    5. Grossman, Michael & Chaloupka, Frank J & Sirtalan, Ismail, 1998. "An Empirical Analysis of Alcohol Addiction: Results from the Monitoring the Future Panels," Economic Inquiry, Western Economic Association International, vol. 36(1), pages 39-48, January.
    6. Sara Markowitz, 2000. "The Price of Alcohol, Wife Abuse, and Husband Abuse," Southern Economic Journal, John Wiley & Sons, vol. 67(2), pages 279-303, July.
    7. Grossman, Michael & Chaloupka, Frank J., 1998. "The demand for cocaine by young adults: a rational addiction approach," Journal of Health Economics, Elsevier, vol. 17(4), pages 427-474, August.
    8. Chaloupka, Frank, 1991. "Rational Addictive Behavior and Cigarette Smoking," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 722-742, August.
    9. Becker, Gary S & Grossman, Michael & Murphy, Kevin M, 1994. "An Empirical Analysis of Cigarette Addiction," American Economic Review, American Economic Association, vol. 84(3), pages 396-418, June.
    10. Young, Douglas J & Bieli´nska-Kwapisz, Agnieszka, 2002. "Alcohol Taxes and Beverage Prices," National Tax Journal, National Tax Association;National Tax Journal, vol. 55(1), pages 57-73, March.
    11. Young, Douglas J & Bieli´nska-Kwapisz, Agnieszka, 2002. "Alcohol Taxes and Beverage Prices," National Tax Journal, National Tax Association, vol. 55(N. 1), pages 57-73, March.
    12. Harl E. Ryder & Geoffrey M. Heal, 1973. "Optimal Growth with Intertemporally Dependent Preferences," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 40(1), pages 1-31.
    13. Angrist, Joshua D, 2001. "Estimations of Limited Dependent Variable Models with Dummy Endogenous Regressors: Simple Strategies for Empirical Practice," Journal of Business & Economic Statistics, American Statistical Association, vol. 19(1), pages 2-16, January.
    14. Chaloupka, Frank J. & Warner, Kenneth E., 2000. "The economics of smoking," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 29, pages 1539-1627, Elsevier.
    15. James J. Heckman & Thomas E. MaCurdy, 1985. "A Simultaneous Equations Linear Probability Model," Canadian Journal of Economics, Canadian Economics Association, vol. 18(1), pages 28-37, February.
    16. Gruber, Jonathan, 1994. "State-mandated benefits and employer-provided health insurance," Journal of Public Economics, Elsevier, vol. 55(3), pages 433-464, November.
    17. 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.
    18. Boyer, Marcel, 1978. "A Habit Forming Optimal Growth Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 19(3), pages 585-609, October.
    19. Peter Arcidiacono, Holger Sieg, Frank Sloan, 2001. "Living Rationally Under the Volcano? Heavy Drinking and Smoking Among the Elderly," Computing in Economics and Finance 2001 207, Society for Computational Economics.
    20. Jonathan Gruber & Botond Köszegi, 2001. "Is Addiction "Rational"? Theory and Evidence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(4), pages 1261-1303.
    21. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
    22. Joshua Angrist & Alan Krueger, 2001. "Instrumental Variables and the Search for Identification: From Supply and Demand to Natural Experiments," Working Papers 834, Princeton University, Department of Economics, Industrial Relations Section..
    23. Iannaccone, Laurence R., 1986. "Addiction and satiation," Economics Letters, Elsevier, vol. 21(1), pages 95-99.
    24. Keeler, Theodore E. & Hu, Teh-Wei & Barnett, Paul G. & Manning, Williard G., 1993. "Taxation, regulation, and addiction: A demand function for cigarettes based on time-series evidence," Journal of Health Economics, Elsevier, vol. 12(1), pages 1-18, April.
    25. Becker, Gary S & Murphy, Kevin M, 1988. "A Theory of Rational Addiction," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 675-700, August.
    26. Mullahy, John & Sindelar, Jody L, 1993. "Alcoholism, Work, and Income," Journal of Labor Economics, University of Chicago Press, vol. 11(3), pages 494-520, July.
    27. Steven D. Levitt & Jack Porter, 2001. "How Dangerous Are Drinking Drivers?," Journal of Political Economy, University of Chicago Press, vol. 109(6), pages 1198-1237, December.
    28. Pollak, Robert A, 1970. "Habit Formation and Dynamic Demand Functions," Journal of Political Economy, University of Chicago Press, vol. 78(4), pages 745-763, Part I Ju.
    29. Stigler, George J & Becker, Gary S, 1977. "De Gustibus Non Est Disputandum," American Economic Review, American Economic Association, vol. 67(2), pages 76-90, March.
    30. Unknown, 1986. "Letters," Choices: The Magazine of Food, Farm, and Resource Issues, Agricultural and Applied Economics Association, vol. 1(4), pages 1-9.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Cseh Attila, 2008. "Labor Market Consequences of State Mental Health Parity Mandates," Forum for Health Economics & Policy, De Gruyter, vol. 11(2), pages 1-34, April.
    2. Johanna Catherine Maclean & Brendan Saloner, 2019. "The Effect of Public Insurance Expansions on Substance Use Disorder Treatment: Evidence from the Affordable Care Act," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 38(2), pages 366-393, March.
    3. Thomas Stratmann, 2007. "Mandatory and affordable health insurance: commentary," Regional Economic Development, Federal Reserve Bank of St. Louis, issue Oct, pages 29-31.
    4. Johanna Catherine Maclean & Michael F. Pesko & Steven C. Hill, 2017. "The Effect of Insurance Expansions on Smoking Cessation Medication Prescriptions: Evidence from ACA Medicaid Expansions," NBER Working Papers 23450, National Bureau of Economic Research, Inc.
    5. Botkins, Elizabeth Robison, 2015. "Does Health Insurance Encourage Obesity? A Moral Hazard Study," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 206228, Agricultural and Applied Economics Association.
    6. Antwi, Yaa Akosa & Maclean, J. Catherine, 2017. "State Health Insurance Mandates and Labor Market Outcomes: New Evidence on Old Questions," IZA Discussion Papers 10578, Institute of Labor Economics (IZA).
    7. Son, Jinyeong, 2022. "Do mandated health insurance benefits for diabetes save lives?," Journal of Public Economics, Elsevier, vol. 216(C).
    8. Popovici, Ioana & Maclean, J. Catherine & French, Michael, 2017. "The Effects of Health Insurance Parity Laws for Substance Use Disorder Treatment on Traffic Fatalities: Evidence of Unintended Benefits," IZA Discussion Papers 10746, Institute of Labor Economics (IZA).
    9. Jonathan Klick & Thomas Stratmann, 2007. "Diabetes Treatments and Moral Hazard," Journal of Law and Economics, University of Chicago Press, vol. 50(3), pages 519-538.
    10. Ioana Popovici & Johanna Catherine Maclean & Michael T. French, 2017. "Health Insurance and Traffic Fatalities: The Effects of Substance Use Disorder Parity Laws," NBER Working Papers 23388, National Bureau of Economic Research, Inc.
    11. David Gilo & Ehud Guttel & Erez Yuval, 2013. "Negligence, Strict Liability, and Collective Action," The Journal of Legal Studies, University of Chicago Press, vol. 42(1), pages 69-82.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Anne Bretteville-Jensen, 2006. "Drug Demand – Initiation, Continuation and Quitting," De Economist, Springer, vol. 154(4), pages 491-516, December.
    2. Sophie Massin, 2011. "La notion d'addiction en économie : La théorie du choix rationnel à l'épreuve," Revue d'économie politique, Dalloz, vol. 121(5), pages 713-750.
    3. Jonathan Guryan & Melissa S. Kearney, 2010. "Is Lottery Gambling Addictive?," American Economic Journal: Economic Policy, American Economic Association, vol. 2(3), pages 90-110, August.
    4. Andrew M. Jones & Audrey Laporte & Nigel Rice & Eugenio Zucchelli, 2019. "Dynamic panel data estimation of an integrated Grossman and Becker–Murphy model of health and addiction," Empirical Economics, Springer, vol. 56(2), pages 703-733, February.
    5. D. Dragone & D. Raggi, 2018. "Testing Rational Addiction: When Lifetime is Uncertain, One Lag is Enough," Working Papers wp1119, Dipartimento Scienze Economiche, Universita' di Bologna.
    6. Zaifu Yang & Rong Zhang, 2014. "Rational Addictive Behavior under Uncertainty," Discussion Papers 14/12, Department of Economics, University of York.
    7. Collet, Roger & de Lapparent, Matthieu & Hivert, Laurent, 2015. "Are French households car-use addicts? A microeconomic perspective," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 54(C), pages 86-94.
    8. Jonathan Guryan & Melissa S. Kearney, 2005. "Lucky Stores, Gambling, and Addiction: Empirical Evidence from State Lottery Sales," NBER Working Papers 11287, National Bureau of Economic Research, Inc.
    9. Silvia TIEZZI, 2010. "Addiction and Smoking Behaviour in Italy," EcoMod2004 330600141, EcoMod.
    10. Jones, A. M. & Laporte, A. & Rice, N. & Zucchelli, E., 2014. "A synthesis of the Grossman and Becker-Murphy models of health and addiction: theoretical and empirical implications," Health, Econometrics and Data Group (HEDG) Working Papers 14/07, HEDG, c/o Department of Economics, University of York.
    11. Dragone, Davide & Raggi, Davide, 2021. "Resolving the milk addiction paradox," Journal of Health Economics, Elsevier, vol. 77(C).
    12. Silvia Tiezzi, 2003. "Addiction and Smoking Behaviour in Italy," Department of Economics University of Siena 412, Department of Economics, University of Siena.
    13. Xiaoou Liu & Rigoberto Lopez, 2012. "Evidence of rational addiction to carbonated soft drinks?," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 4(3), pages 300-317, August.
    14. Hyeokkoo Eric Kwon & Hyunji So & Sang Pil Han & Wonseok Oh, 2016. "Excessive Dependence on Mobile Social Apps: A Rational Addiction Perspective," Information Systems Research, INFORMS, vol. 27(4), pages 919-939, December.
    15. Piccoli, Luca & Tiezzi, Silvia, 2021. "Rational addiction and time-consistency: An empirical test," Journal of Health Economics, Elsevier, vol. 80(C).
    16. Badi H. Baltagi & Ingo Geishecker, 2006. "Rational alcohol addiction: evidence from the Russian longitudinal monitoring survey," Health Economics, John Wiley & Sons, Ltd., vol. 15(9), pages 893-914, September.
    17. Chen Zhen & Michael K. Wohlgenant, 2006. "Meat Demand under Rational Habit Persistence," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 54(4), pages 477-495, December.
    18. Champarnaud, Luc & Michel, Philippe, 2000. "Biens culturels, transmission de culture et croissance," L'Actualité Economique, Société Canadienne de Science Economique, vol. 76(4), pages 501-520, décembre.
    19. Xiaoou, Liu, 2009. "Rational Addiction Evidence From Carbonated Soft Drinks," 2009 Conference, August 16-22, 2009, Beijing, China 51620, International Association of Agricultural Economists.
    20. Levy-Livermore, A., 1998. "Life-Expectancy Augmented Rational Addition: A Note," Economics Working Papers wp98-01, School of Economics, University of Wollongong, NSW, Australia.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ucp:jlstud:v:35:y:2006:p:175-198. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Journals Division (email available below). General contact details of provider: https://www.journals.uchicago.edu/JLS .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.