Have a Drink on Us: Mental Health Parity, Rational Addiction, and Off-Setting Behavior
32 Pages Posted: 22 Oct 2002
Date Written: October 7, 2002
Abstract
I augment the standard rational addiction model to include an insurance component whereby the effects of addiction can be mitigated. The model implies that increasing the level of insurance in the future induces a forward-looking individual to consume more of a harmfully addictive good currently. I test this implication using the adoption of mental health parity mandates in some states during the 1990s as an exogenous shock on the availability of future insurance. I examine the effects of this shock on the consumption of alcohol and find that parity legislation led to a statistically significant increase in alcohol consumption. To account for the possible endogeneity of the adoption of mental health parity mandates, I perform an instrumental variables analysis of beer consumption, and find that my original analysis underestimates the effect by a factor of ten.
Keywords: Rational Addiction, Alcohol, Mental Health, Insurance, Parity
JEL Classification: I12, I18, K32, J32
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Is Addiction "Rational"? Theory and Evidence
By Jonathan Gruber and Botond Koszegi
-
An Empirical Analysis of Cigarette Addiction
By Gary S. Becker, Michael Grossman, ...
-
The Effects of Government Regulation on Teenage Smoking
By Eugene M. Lewit, Douglas Coate, ...
-
Price, Tobacco Control Policies and Smoking Among Young Adults
By Frank J. Chaloupka and Henry Wechsler
-
Youth Smoking in the U.S.: Evidence and Implications
By Jonathan Gruber and Jonathan Zinman
-
An Empirical Analysis of Alcohol Addiction: Results from the Monitoring the Future Panels
By Michael Grossman, Frank J. Chaloupka, ...