Michael Grossman

The Demand for Cocaine by Young Adults: A Rational Addiction Approach

This paper applies the rational addiction model to the demand for cocaine by young adults in the Monitoring the Future panel. The price of cocaine is added to this survey from the Drug Enforcement Administrations System to Retrieve Information from Drug Evidence. Results suggest that annual participation and frequency of use given participation are negatively related to the price of cocaine. In addition, current participation (frequency) is positively related to past and future participation (frequency). The long-run price elasticity of total consumption (participation multiplied by frequency given participation) of -1.35 is substantial.

Fast-Food Restaurant Advertising on Television and its Influence on Childhood Obesity

Childhood obesity is an escalating problem around the world that is especially detrimental as its effects carry on into adulthood. In this paper we employ the 1979 Child–Young Adult National Longitudinal Survey of Youth and the 1997 National Longitudinal Survey of Youth to estimate the effects of television fast‐food restaurant advertising on children and adolescents with respect to being overweight. A ban on these advertisements would reduce the number of overweight children ages 3–11 in a fixed population by 18 percent and would reduce the number of overweight adolescents ages 12–18 by 14 percent. The elimination of the tax deductibility of this type of advertising would produce smaller declines of between 5 and 7 percent in these outcomes but would impose lower costs on children and adults who consume fast food in moderation because positive information about restaurants that supply this type of food would not be completely banned from television.

Unobservables, Pregnancy Resolutions, and Birthweight Production Functions in New York City

This paper makes contributions to the estimation of health production functions and the economics of fertility control. We present the first infant health production functions that simultaneously control for self-selection in the resolution of pregnancies as live births or induced abortions and in the use of prenatal medical care services. We also incorporate the decision of a pregnant woman to give birth.

The market for illegal goods : The case of drugs

This paper considers the costs of reducing consumption of a good by making its production illegal and punishing apprehended illegal producers. We use illegal drugs as a prominent example. We show that the more inelastic either demand for or supply of a good is, the greater the increase in social cost from further reducing its production by greater enforcement efforts. So optimal public expenditures on apprehension and conviction of illegal suppliers depend not only on the difference between the social and private values from consumption but also on these elasticities. When demand and supply are not too elastic, it does not pay to enforce any prohibition unless the social value is negative. We also show that a monetary tax could cause a greater reduction in output and increase in price than optimal enforcement against the same good would if it were illegal, even though some producers may go underground to avoid a monetary tax. When enforcement is costly, excise taxes and quantity restrictions are not equivalent.

Variations in infant mortality rates among counties of the United States: The roles of public policies and programs

The purpose of this paper is to shed light on the causes of the rapid decline in the infant mortality rate in the United States in the period after 1963. The roles of four public policies are considered: Medicaid, subsidized family planning services for low-income women, maternal and infant care projects, and the legalization of abortion. The most striking finding is that the increase in the legal abortion rate is the single most important factor in reductions in both white and nonwhite neonatal mortality rates. Not only does the growth in abortion dominate the other public policies, but it also dominates schooling and poverty.

Pregnancy wantedness and the early initiation of prenatal care

The study examines the impact of the wantedness of a pregnancy on the demand for early prenatal care. Using a cohort of pregnant women in New YorkCity, we estimate a prenatal care demand function in which we control for the probability of giving birth, given a woman is pregnant. We interpret this control as a measure of wantedness, The results indicate that if the black and Hispanic women who aborted had instead given birth, they would have delayed the initiation of prenatal care, on average, more than three-quarters of a month longer than the mean number of months of delay that were actually observed for the women who gave birth. Byallowing women to terminate an unwanted pregnancy, induced abortion increases the average use of prenatal care among black and Hispanic women relative to what would have been observed if the women who aborted had instead given birth.

Birth Outcome Production Function in the United States

This paper contains the first infant health production functions that simultaneously consider the effects of a variety of inputs on race-specific neonatal mortality rates. These inputs include the use of prenatal care, neonatal intensive care, abortion, federally subsidized organized family planning clinics, maternal and infant care projects, community health centers, and the WIC program. We place major emphasis on two-stage least squares estimation. Our results underscore the qualitative and quantitative importance of abortion, prenatal care, neonatal intensive care, and the WIC program in black and white birth outcomes.

Chapter 10 Education and Nonmarket Outcomes

Abstract This chapter explores the effects of education on nonmarket outcomes from both theoretical and empirical perspectives. Examples of outcomes considered include general consumption patterns at a moment in time, savings and the rate of growth of consumption over time, own (adult) health and inputs into the production of own health, fertility, and child quality or well-being reflected by their health and cognitive development. They are distinguished from the labor market outcomes of education in terms of higher earnings and wage rates. The focus is on identifying causal effects of education and on mechanisms via which these effects operate. The chapter pays a good deal of attention to the effects of education on health for a variety of reasons. They are the two most important sources of human capital: knowledge capital and health capital. They interact in their levels and in the ways they affect the cost and usefulness of the other. There is a large literature addressing the nature of their complementarities. While each affects the production and usefulness of the other, there are important dynamics of their interaction, seen in the age-structure of the net and gross production of the two. This sequencing also affects their optimal amounts. In the conceptual foundation section, models in which education has productive efficiency and allocative efficiency effects are considered. These frameworks are then modified to allow for the endogenous nature of schooling decisions, so that observed schooling effects can be traced in part to omitted “third variables” such as an orientation towards the future. An additional complication is that schooling may contribute to a future orientation in models with endogenous preferences. The empirical review provides a good deal of evidence for the proposition that the education effects are causal but is less conclusive with regard to the identification of specific mechanisms.

Health, Hours and Wages

This paper has two purposes. The first is to obtain structural health parameters in wage and labor supply function based on a completely specified model of the determination of these two variables. The second is to examine how the estimated effects of health on labor market behavior are altered when health is made an endogenous variable. We hypothesize that an increase in health should raise market productivity, measured by the wage rate, and should also increase the amount of time available for work in the market. Health, itself should respond in a positive fashion to increases in variables associated with efficiency of production within the household, such as schooling, and to increases in utilization of market goods which enter into the production of good health. We examine three variables related to the level of medical utilization: physicians per capita in the county of residence; health insurance coverage; and utilization of preventive medical services.

Determinants of Pediatric Care Utilization

The purpose of this paper is to understand the determinants of utilization of pediatric care--care rendered to children by all physicians. Multivariate techniques are employed to examine four measures of pediatric care utilization in a national sample of children between the ages of 1 and 5. These measures are the probability of contacting a physician within the past year, the probability of obtaining a preventive physical examination within the past year, the number of office visits to physicians in private practice by children with positive visits, and the average quality of these visits.