This blog contains posts and comments written by students in Dr. Tufte's economics classes at Southern Utah University.
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.
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3 comments:
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.
-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.
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Suffering from an addiction. This website has a lot of great resources and treatment centers. http://www.treatmentcenters.org
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