MENTAL ILLNESS AND THE DEMAND FOR ALCOHOL, COCAINE, AND CIGARETTES |
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| Authors: | Henry Saffer Dhaval Dave |
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| Affiliation: | Saffer:;Research Associate, National Bureau of Economic Research, 365 Fifth Ave., Suite 5318, New York, NY 10016-4309, and Professor, Kean University, Union, NJ 07083. Phone 1-212-817-7956, Fax 1-212-817-1597, E-mail Dave:;Faculty Research Fellow, National Bureau of Economic Research, 365 Fifth Ave., Suite 5318, New York, NY 10016-4309, and Assistant Professor, Bentley College, Department of Economics, Waltham, MA 02452. Phone 1-212-817-7955, Fax 1-212-817-1597, E-mail |
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| 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 ) |
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