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MENTAL ILLNESS AND THE DEMAND FOR ALCOHOL, COCAINE, AND CIGARETTES
Author(s) -
Saffer Henry,
Dave Dhaval
Publication year - 2005
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1093/ei/cbi016
Subject(s) - mental illness , endogeneity , addiction , economics , consumption (sociology) , subsidy , psychiatry , simultaneity , psychology , microeconomics , mental health , econometrics , market economy , social science , physics , classical mechanics , sociology
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 )