Table of contents(25 chapters)
This book marks the resumption of an annual series of research in health economics previously published by JAI Press Inc. and entitled Advances in Health Economics and Health Services Research. Fifteen volumes in that series appeared in the years from 1979 through 1995. The continuation of the series bears the title Advances in Health Economics and Health Policy and is being published by JAI, an imprint of Elsevier Ltd.
All chapters were peer-reviewed. Special thanks go to:
Six papers on individual behaviour are included in this volume. The first three are devoted to the determinants of individual consumption behaviour, the next two analyse the impact of individual substance use on labour market performance and criminal activities, respectively, while the last one challenges recent research, which claims that the increase in the prescription of antidepressants is the major factor behind the observed reduction in suicide rates during the 1990s.
Among psychiatric illnesses, genetically determined disorders usually have an early onset and a severe and complicated course. Gene–environmental interaction is of importance for aggressive impulsive behaviour. For example, alcoholism type II has a high family loading, a severe course, and is often associated with antisocial behaviour. In order to gain further understanding of aggressive and impulsive behaviour, genes determining serotonin metabolism, neurosteroids and carbohydrate metabolism should be of interest to investigate. Furthermore, modern brain-imaging studies will reveal the site of action of aggressiveness and impulsivity. Within brain regions of interest, biological studies will promote our knowledge of this deleterious behaviour.
I discuss economic approaches to the demand for harmfully addictive substances with an emphasis on the role of money prices. First, I examine trends in the real prices and in the prevalence of the use of cigarettes, alcohol, cocaine, heroin, and marijuana in the U.S.A. Then I present estimates of time-series demand functions. Next, I discuss how economists have modified their traditional model of consumer behaviour to incorporate the addictive aspects of illegal substances. I conclude with implications for tax policy and for the lively and contentious debate concerning the legalization of marijuana, cocaine, and heroin.
We use postpartum survey data linked to medical records and city-level drug prices to estimate the demand for illicit drugs among pregnant women. We find that a $10 increase in the retail price of a gram of pure cocaine decreases illicit drug use by 12–15%. The estimated price effects for heroin are lower than for cocaine and are less robust across alternative model specifications. This study provides the first estimates of the effects of drug prices on prenatal drug use and yields important information about the potential of drug enforcement as a tool for reducing illicit drug use among pregnant women.
This study analyses the effects of alcohol consumption on the labour market outcomes of older individuals. The data set used consists of five waves of the Health and Retirement Study. The results from models with a limited number of covariates indicate that there is a wage and earnings premium associated with alcohol use. This premium progressively diminishes as more individual-level controls are added to the standard earnings function. The data set is longitudinal which allows for estimation of individual-fixed-effects specifications. These results indicate that alcohol use does not have a positive effect on earnings and wages.
Using data from the U.S. National Longitudinal Study of Adolescent Health, this chapter investigates the impact of individual drug use on robbery, burglary, theft, and damaging property for juveniles. Using a variety of fixed-effects models that exploit variations over time and between siblings and twins, the results indicate that drug use has a significant impact on the propensity to commit crime. We find that the median impact of cocaine use on the propensity to commit various types of crimes is 11 percentage points. The impact of using inhalants or other drugs is an increase in the propensity to commit crime by 7 percentage points, respectively.
Recent research claims that the major part of the observed reduction in suicide rates during the 1990s can be explained by the increase in the prescription of antidepressants. However, this conclusion is based on research that only looks at raw correlations; confounding effects from other variables are not controlled for. Using a rich Swedish data set, we reinvestigate the issue. After controlling for other covariates, observed as well as unobserved, that might affect the suicide rate, we find, overall, no statistically significant effects from antidepressants on the suicide rate; when we do get significant effects, they are positive for young persons. Regarding the latter result, more research is needed before any firm policy conclusion can be made.
It is argued that addicts, as people in general, are forward-looking and that they try to make the best of what they have got. However, this does not imply that they are fully rational. Cognitive defects, instabilities in preferences, and irrationalities in the form of wishful thinking and dynamical inconsistency play an important role in addictive behaviours. These “imperfections” in people's rationality may not have very large consequences in the case of ordinary goods, but their effect can be dramatic in relation to addictive goods. In the first part of the paper, the rational addiction theory and the empirical evidence that have been presented in support of the theory is reviewed. Regarding the conventional tests of the theory by econometric methods, it is argued that the tests are misguided, both theoretically and methodologically. Furthermore, it is claimed that the definition of addiction implicit in the rational addiction theory is unrealistic, and that the theory makes unrealistic assumptions about human nature. Some empirical evidence for these claims is reviewed. It is concluded that although the theory has its virtues, it faces serious problems and must be rejected in its original form. Secondly, the socio-cultural embeddedness of addictive behaviours, and the social roots of individual preferences, are discussed. These issues are more or less ignored in rational addiction theory. It is argued that we cannot expect to obtain a proper understanding of many addictive phenomena, unless they are seen in their proper socio-cultural context.
This chapter argues that models trying to explain the spread of drug use should not be based on standard epidemiological models developed to describe the spread of infectious diseases. The main weaknesses of the standard model are the lack of attention to micro-foundations and the inappropriateness of several of its assumptions in the context of drug use. An approach based on mechanisms and social interaction is argued to provide a promising alternative to the standard approach. To illustrate this, a model of the spread of drugs based on two mechanisms has been developed (observational learning and social stigma). Lastly, some of the difficulties in testing and deriving policy implications in these models are discussed.
This chapter outlines a new approach to measuring peer influence on the choice of a young person to smoke cigarettes. The methodology is based on estimating an equilibrium discrete choice model in which the relative benefit to smoking is increasing in the fraction of peers who smoke. In contrast to much of the literature, this structural model allows for positive correlation in observable and unobservable characteristics between peers. The structural approach has been applied to estimating close friend peer effects in Canada, California, and the U.S.A. in general. In all three settings, I find that close friend smoking is substantially less influential than is generally found by previous studies.
The study aimed at assessing whether diffusion theory may be applicable to explain the increasing trends in consumption of table wine in Norway over a four-decade period. Data comprised a series of eight cross-sectional surveys from 1962 to 1999 in national samples of adults. The results indicated that diffusion theory might in part be applicable to explain the trends in wine consumption in Norway. Thus, early adopters were characterized by high social status and being more “cosmopolite”. Yet, the typical S-shaped curve for adoption rate was not found, nor the expected association between wine consumption and social network.
The purpose of this chapter is to examine the role of alcohol policies in reducing the incidence of sexually transmitted diseases (STDs) among youth. Previous research has shown that risky sexual practices (e.g., unprotected sex and multiple partners) that increase the risk of contracting an STD are highly correlated with alcohol use. If alcohol is a cause of risky sexual behaviour, then policies that reduce the consumption of alcohol may also reduce the incidence of STDs. In this chapter, we examine the relationship between alcohol policies (e.g., beer taxes and statutes pertaining to alcohol sales and drunk driving) and rates of gonorrhea and acquired immune deficiency syndrome (AIDS) among teenagers and young adults. Results indicate that higher beer taxes are associated with lower rates of gonorrhea for males and are suggestive of lower AIDS rates. Strict drunk driving policies in the form of zero tolerance laws may also lower the gonorrhea rate among males under the legal drinking age.
This chapter introduces a simulation model to estimate the social costs of problem drug misusers in England and Wales, and how policies to increase the number of drug users in treatment may impact on both social costs and government expenditure. Consequences are divided into five domains – health, crime, social care, work, and driving. Social costs are estimated to be between £12 and £12.3 billion, and the total cost of government expenditure is around £3.5 billion. Increases in the numbers in treatment, are estimated to reduce social costs across a 5-year period by between £3.0 and £4.4 billion.
This chapter examines the impact of cigarette prices, taxes, and tobacco control policies on youth and young adult smoking propensity and intensity in the U.S. during the years 1997–2001, a period characterized by significant changes in cigarette prices and tobacco control policies. Employing a fixed effects technique, we find a strong negative impact of cigarette prices and taxes on youth and young adult smoking prevalence and conditional demand. Moreover, we find purchase, use, and possession laws to be inversely related to youth and young adult smoking prevalence.
In recent policy discussions, the conventional wisdom is that adolescent smoking is substantially more tax- or price-responsive than adult smoking.1 In a previous study, we used data from the first three waves of the National Education Longitudinal Study (NELS) to estimate the impact of taxes and prices on smoking initiation during adolescence (DeCicca, Kenkel, & Mathios, 2002). Contrary to the conventional wisdom, we found weak or non-existent tax/price effects in our models of the onset of adolescent smoking between 1988 and 1992. In this study, we use data from the 2000 wave of NELS, when most respondents were about 26 years old. Although cigarette prices increased by almost 40% in real terms between 1992 and 2000, smoking prevalence among the NELS respondents also increased from 18% to 23%, about the same increase observed in other cohorts over these ages.
Coupons and Advertising in Markets for Addictive Goods: Do Cigarette Manufacturers React to Known Future Tax Increases?
We develop and test a pricing model for a monopolist that sells an addictive good. The model illustrates the conditions under which a monopolist lowers the price he charges youth when a future tax is imposed. Using household survey data, we investigate whether individuals use “cents-off” coupons in a way consistent with the price discrimination implied by the model. We find evidence that all smokers, not just the young, are more likely to use coupons prior to a tax increase if they are exposed to more advertising. With our data we cannot test whether cigarette manufacturers selectively offer youth price discounts in other ways.
Psychoactive substances take on many symbolic meanings, and thus the politics of psychoactive substances has featured symbolic elements, or value-based rationality, alongside and often dominating instrumental rationality. Drawing particularly on the work of Joseph Gusfield and Nordic scholars, the chapter considers the symbolic dimension in the politics of substance use, even in Nordic countries celebrated for their societal commitment to knowledge-based policymaking, and its effects on the interplay of science and policy.
Although frequently discussed as a singular policy, there is tremendous variation in the laws and regulations surrounding so-called decriminalization policies adopted by Western countries, with many jurisdictions adopting depenalization policies rather than policies that actually change the criminal status of cannabis possession offences. This paper provides a discussion of the liberalization policies being adopted in Western countries, highlighting distinct elements about particular policies that are important for proper analysis and interpretation of the policies. It then discusses some of the environmental factors that also shape these policies, and hence influence their potential impact, using data from the U.S.A. as a particular example. The results clearly show that researchers should be careful conducting intra- or international comparisons of policies because important aspects of these policies are frequently ignored.
Injecting drug use (IDU) has traditionally been seen as a law enforcement problem and a stain on society. With the emergence of human immunodeficiency virus (HIV)/acquired immune deficiency syndrome (AIDS), however, the discourse on IDU has widened to include crucial public health and human rights concerns. Economic analysis, too, has much to contribute to the policy debate. By examining the costs and benefits of drug use from the perspective of injecting drug users, economic analysis can shed light on the problem of IDU and the transmission of HIV among users. This chapter also presents new results on the economic analysis of needle exchange programmes.
The goals of this chapter are three-fold: (1) to outline some broad empirical regularities concerning how drug problems evolve over time, (2) to sketch some plausible mechanisms for ways in which aspects of that variation might be endogenous, and (3) to review two classes of dynamic models of drug use that have implications for how policy should vary over a drug epidemic.
Economic Evaluation of Relapse Prevention for Substance Users: Treatment Settings and Health Care Policy
Evaluating the prevention, intervention, and treatment programme is critical to understanding the decision-making behaviour of substance abusers. The study interweaves behavioural health economics with the extended PRECEDE–PROCEED Model and examines the effectiveness of treatment settings for substance users in New Jersey Drug and Alcohol Abuse Treatment (13,775 samples). The study also identifies the factors that are associated with substance users’ recurrence to the treatment centre. The results concluded that educational attainment, counselling services from health care providers, mental agency services, and detoxification treatments have a significant impact on preventing relapse behaviour.
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