NCPA - National Center for Policy Analysis

Consumptive Behavior Among The Mentally Ill

July 8, 2002

A true diagnosable mental illness -- an abnormality in cognition, emotion, mood, or social function severe in level or duration -- affects about 24 percent of the U.S. population in any given year, according to mental health professionals. A staggering 43 percent of the population has had a diagnosable mental illness at some point in their lives.

There is a definite connection between mental illness and the use of addictive substances. Individuals with an existing mental illness:

  • Consume roughly 38 percent of all alcohol.
  • Use 44 percent of all cocaine.
  • Smoke 40 percent of all cigarettes.

Furthermore, the people who have ever experienced mental illness consume about 69 percent of all the alcohol, 84 percent of all the cocaine, and 68 percent of all cigarettes.

Researchers theorize that if people with mental illness are strongly affected by increased prices, then tax increases are a justifiable method for reducing consumption within this high-consuming group. Among recent findings:

  • When other factors are held constant, mental illness increases the use of addictive goods -- relative to use by the overall population -- by 20 percent for alcohol, 27 percent for cocaine, and 86 percent for cigarettes.
  • A history of mental illness increases participation (relative to participation in the overall population) by 25 percent for alcohol, 69 percent for cocaine, and 94 percent for cigarettes.

Individuals with mental illness are sensitive to price changes, but their sensitivity to price changes is roughly similar to those who are not mentally ill. The increased prices of the addictive good will dampen its use by the mentally ill, so alcohol and tobacco taxes may be a valuable policy tool.

Source: Marie Bussing-Birks, "Mental Illness and Substance Abuse," NBER Digest, April 2002; based on Henry Saffer and Dhaval Dave, "Mental Illness and the Demand for Alcohol, Cocaine, and Cigarettes," NBER Working Paper No. 8699, National Bureau of Economic Research.

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