Abstract

http://ssrn.com/abstract=338200
 
 

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Have a Drink on Us: Mental Health Parity, Rational Addiction, and Off-Setting Behavior


Jonathan Klick


University of Pennsylvania Law School; Erasmus School of Law; PERC - Property and Environment Research Center

October 7, 2002

George Mason Law & Economics Research Paper No. 02-25

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.

Number of Pages in PDF File: 32

Keywords: Rational Addiction, Alcohol, Mental Health, Insurance, Parity

JEL Classification: I12, I18, K32, J32

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Date posted: October 22, 2002  

Suggested Citation

Klick, Jonathan, Have a Drink on Us: Mental Health Parity, Rational Addiction, and Off-Setting Behavior (October 7, 2002). George Mason Law & Economics Research Paper No. 02-25. Available at SSRN: http://ssrn.com/abstract=338200 or http://dx.doi.org/10.2139/ssrn.338200

Contact Information

Jonathan Klick (Contact Author)
University of Pennsylvania Law School ( email )
3501 Sansom Street
Philadelphia, PA 19104
United States
2157463455 (Phone)
Erasmus School of Law ( email )
3000 DR Rotterdam
Netherlands
PERC - Property and Environment Research Center
2048 Analysis Drive
Suite A
Bozeman, MT 59718
United States

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