Mental illness and the demand for alcohol, cocaine, and cigarettes

Document Type

Article

Publication Date

9-12-2005

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. © Western Economic Association International.

Publication Title

Economic Inquiry

First Page Number

229

Last Page Number

246

DOI

10.1093/ei/cbi016

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