2/15/2006

Reducing the Risks of Alcoholism

The article, Law of Demand, mentions some research that is trying to prove that “as the availability of addiction treatment options grows, individuals will consume more of an addictive good." It makes a lot of sense to me. As the risks of addiction decrease, the law of demand says that usage of addictive substances should go up. In a sense, health insurance coverage and treatment availability increases the number of addicts in the country. I thought this was a good example of how something other than price changes can increase the demand for a good.

6 comments:

Ole said...

I tend to agree with Boris. How many people out there who are smoking addicts think to themselves, "I don't need to quit now before I have lung cancer, because I can just wait and then be cured." Before all the "cures", the big risk of smoking was lung cancer and then death. Now as we make more breakthroughs in technology and healthcare I wonder if we will see more individuals who are willing to take the risk of smoking, alcohol consumption, or any other types of drugs. I guess the ultimate addiction is the mental addiction, even though technology and healthcare may be able to clean you of cancer or lessen the risk of death, you may still have the addiction, not to mention the yucky habit of drug addiction. However, the risk of death may have decreased and with that will we see more demand? I believe so.

rico said...

I think that people do tend to get that sort of attitude when it comes to health care. If it can be fixed, then don't worry about it. I believe that health care costs are too expensive for that to be looked at as an alternative. Just because it is available doesn't mean that more people will start using addictive substances. An interesting topic would be condoms. Did people become more sexually active when condoms were invented, or did the ones who were currently sexually active just use them because they were available? Sorry if my analogy made anyone uncomfortable, but I thought it was an interesting comparison.

Brooke said...

I agree that people can often be more careless when they know there are treatments and facilities available to help or fix them. However, I find it hard to believe that someone would take up smoking, drug use, or alcohol consumption simply because they know they have better health insurance or more rehab centers available. While an existing addict may develop a more care-free attitude because they know help is available, this attitude has been common among addicts for decades, not just in recent years.

Dr. Tufte said...

-1 on Boris' post for grammatical errors.

BTW: this is broadly known as a Peltzman effect, after the University of Chicago economist who recognized substitution and income effects can lead to unusual consequences: he noted that because seat belts make safety cheaper, they will increase driving speed and pedestrian deaths.

What is even more disturbing to me is the extent to which societies will work at cross purposes on issues like this. If we believe in incarceration (even in rehab) as a solution, then it is contradictory to spend money on treatment, which will lead to more incarceration. Altenratively, if we believe in treatment, then we shouldn't spend money on incarceration. But, we've splintered these decisions, so we end up spending more money.

I think Rico's point is fine, but condoms are a bad example, since they've been around for over 2,000 years.

Brooke is confusing elasticity with incentives. Brooke is correct that behavior of addicts is likely to be inelastic along a number of dimensions. However, even inelastic behavior can be modified by incentives, and in this case there is less of an incentive to avoid drugs. Not everyone will be susceptible to that (perhaps not even a large number), but some will, and more importantly there will be no one who will say "oh, the costs of doing drugs has been reduced so I will do less".

This point can be hard to get across, so let me offer another example. Wives don't usually kill husbands, and it's hard to think of an incentive that might change that behavior. Funny thing is though, there actually is an example of this. Up until the 1970s there were few examples of what is known as no-fault divorce: that is a divorce that can be initiated and carried through by one partner so that they can just walk away from a relationship that isn't working for them. When no-fault divorce was introduced, the number of husbands killing wives did not decline (probably because a lot of the men were just psychos anyway). However, the number of wives killing husbands dropped precipitously. The reason is that if a woman left a marriage without no-fault divorce she usually did not get custody of the kids. To avoid this, they often killed abusive husbands. Alternatively, husbands who initiated divorces before no-fault were no more or less likely to get custody than if they didn't file for divorce. Nobody recognized this prior to the change in the laws because no one could imagine the conditions under which a wife would have an incentive to kill her husband ... yet it was there all along.

Blake said...

Personally I don't think that just because addictive treatment programs are available, that the amount of addictive behaviors will go up, and therefore the consumption of alcohol would increase. If treatment programs were to be eliminated, what would be the alternative? Where would struggling addicts turn for help? Those problems could yield high costs for society as a whole, and would likely just be ignored, leaving many addicts in desperate situations both mentally, physically, and financially.

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