Michael Grossman

The Graduate Center, CUNY | CUNY

The year 2022 is the 50th anniversary of the publication of my demand for health model in “On the Concept of Health Capital and the Demand for Health,” Journal of Political Economy 80(2): 223–255, and in The Demand for Health: A Theoretical and Empirical Investigation, NBER Occasional Paper 119 New York: Columbia University Press for the NBER. To m...

Aims To estimate the association of e‐cigarette advertisement exposure with e‐cigarette and cigarette use behavior among US adults. Design Data from the 2013–14 National Adult Tobacco Survey (NATS) were linked to Kantar Media and National Consumer Study data to construct measures of e‐cigarette advertisements on TV and in magazines. The relationsh...

E-cigarettes provide nicotine in a vapor form, which is considered less harmful than the smoke from combustible cigarettes because it does not contain the toxins that are found in tobacco smoke. E-cigarettes may be effective in helping smokers to quit or they might simply provide smokers a method of bypassing smoking restrictions. There is very lit...

We provide the first causal evidence on whether e-cigarette advertising on television and in magazines encourages adult smokers to quit. We find the answer to be yes for TV advertising but no for magazine advertising. Our results indicate that a policy banning TV advertising of e-cigs would have reduced the number of smokers who quit in the recent...

In this paper, we investigate the relationship between cannabis use and attitudes to legalizing the use of cannabis. Predictions from theory provide a means of learning about the roles of information, self interest and regret in explaining differences in attitudes to legalization between those who currently use, those who have used in the past and...

Many studies suggest that years of formal schooling completed is the most important correlate of good health. There is much less consensus as to whether this correlation reflects causality from more schooling to better health. The relationship may be traced in part to reverse causality and may also reflect “omitted third variables” that cause healt...

This paper presents a new empirical study of the effects of televised alcohol advertising and alcohol price on alcohol consumption. A novel feature of this study is that the empirical work is guided by insights from behavioral economic theory. Unlike the theory used in most prior studies, this theory predicts that restriction on alcohol advertising...

Parental alcohol consumption is often associated with an increased likelihood of child abuse. As consumption is related to price, the purpose of this paper is to investigate the propensity for increases in the full price of alcohol to influence entry rates and the length of time spent in foster care. Using alcoholic beverage prices and a measure of...

We examine the effect of food prices on clinical measures of obesity, including body mass index (BMI) and percentage body fat (PBF) measures derived from bioelectrical impedance analysis (BIA) and dual energy X-ray absorptiometry (DXA), among youths ages 12 through 18 in the National Health and Nutrition Examination Survey. This is the first study...

We estimate price regressions for surgical procedures used to treat colon cancer, a leading cause of cancer mortality. Using a claims database for self-insured employers, we focus on transaction prices, rather than more commonly available billing data that do not reflect actual payments made. Although the responsiveness of prices to hospital perfor...

Public policies are often made without much recourse to economic reasoning. Economists are often unaware of what is happening in the world of public affairs. As a result, both the quality of public decision-making and the role that economists play in it are less than optimal. This feature contains short articles on topics that are currently on the...

We examine the effects of fast-food restaurant advertising on television on the body composition of adolescents as measured by percentage body fat (PBF) and to assess the sensitivity of these effects to using conventional measures of youth obesity based on body-mass index (BMI). We merge measures of body composition from bioelectrical-impedance ana...

The behavioral economic model presented in this paper argues that the effect of advertising and price differ by past consumption levels. The model predicts that advertising is more effective in reducing consumption at high past consumption levels but less effective at low past consumption levels. Conversely, the model predicts that higher prices ar...

This study examines racial, ethnic and gender differentials in physical activity. Individuals engage in physical activity during leisure-time and also during in many other activities such as walking to work, home maintenance, shopping and child care. Physical activity also occurs on the job is this is referred to as work physical activity. Prior st...

The purpose of this paper is to empirically estimate the propensity for alcohol-related policies to influence rates of entry into foster care and the length of time spent in foster care. Alcohol consumption is believed to be major contributing factor to child maltreatment, associated with an increased likelihood of abuse and longer durations once i...

We exploit a natural experiment to estimate the causal impact of parental education on educational outcomes of their children when they are high school seniors. In 1968, the Taiwanese government extended compulsory education from 6 to 9 years and opened over 150 new junior high schools at a differential rate among regions. We form treatment and con...

Preferences and attitudes to illicit drug policy held by individuals are likely to be an important influence in the development of illicit drug policy. Among the key factors impacting on an individual's preferences over substance use policy are their beliefs about the costs and benefits of drug use, their own drug use history, and the extent of dru...

We estimate the impacts of the introduction of National Health Insurance (NHI) in Taiwan in March 1995 on the health of infants. Prior to NHI, government workers (the control group) possessed health insurance policies with comprehensive coverage for births and infant medical care services. Private sector industrial workers and farmers (the treatmen...

In the past three decades, the number of obese adults in the United States has doubled and the number of obese children almost tripled, which may lead to increased medical expenditures, productivity loss, and stress on the health care system. Economic analysis now shows that weight gain is the result of individual choices in response to economic en...

User sanctions influence the legal risk for participants in illegal drug markets. A change in user sanctions may change retail drug prices, depending on how it changes the legal risk to users, how it changes the legal risk to dealers, and the slope of the supply curve. Using a novel dataset with rich transaction-level information, this paper evalua...

We underscore the close link between the economics of the household and health economics in a framework in which consumers produce their fundamental objects of choice. Health is produced with inputs of market goods and services and the own time of the consumer. Health is demanded not only because it is an argument in the utility function but also b...

In this paper, we investigate the association between weight and adolescent's educational attainment, as measured by highest grade attended, highest grade completed, and drop out status. Data for the study came from the 1997 cohort of the National Longitudinal Survey of Youth (NLSY), which contains a large, national sample of teens between the ages...

Many studies suggest that years of formal schooling completed is the most important correlate of good health. There is much less consensus as to whether this correlation reflects causality from more schooling to better health. The relationship may be traced in part to reverse causality and may also reflect “omitted third variables” that cause healt...

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 child...

In this paper, we investigate the association between weight and children's educational achievement, as measured by scores on Peabody Individual Achievement Tests in math and reading, and grade attainment. Data for the study came from the 1979 cohort of the National Longitudinal Survey of Youth (NLSY), which contains a large, national sample of chi...

Este artículo examina los costos de reducir el consumo de un bien declarando ilegal su producción y castigando a los productores ilegales. Las drogas son el ejemplo más destacado. Cuanto más inelástica es la demanda o la oferta, mayor es el incremento del costo social de reducir la producción con mayor represión. Así, el gasto público óptimo de cap...

One important goal of a universal health insurance is to improve the health outcomes of the population. This paper aims to estimate the impact of the introduction of the National Health Insurance (NHI) in Taiwan in 1995 on maternal health behaviors and infant health outcomes. The NHI provides the same health insurance for the entire population of T...

In 1968, the Taiwanese government extended compulsory education from 6 to 9 years and opened over 150 new junior high schools at a differential rate among regions. Within each region, we exploit variations across cohorts in new junior high school openings to construct an instrument for schooling, and employ it to estimate the causal effects of moth...

Growing rates of childhood obesity and its adverse health consequences have focused public attention on identifying the causes of and solutions to the obesity problem. While the health consequences of obesity are serious, obesity may also adversely affect other dimensions of child well-being that have long-term consequences. Specifically, obesity m...

The purpose of this chapter is to empirically estimate the propensity for alcohol-related policies to influence rates of child abuse. Child maltreatment is measured by the number of abused children and the number of child fatalities due to abuse. The alcohol regulations of interest include beer, wine, and liquor taxes and prices, drunk driving laws...

This paper considers the costs of reducing consumption of goods by making their production illegal and punishing illegal producers. We use illegal drugs as a prominent example. We show that the more inelastic either demand for or supply of goods is, the greater the increase in social cost from further reducing its production by greater enforcement...

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...

We address Gruber and Frakes's criticisms that (1) the state excise tax on a package of cigarettes is a more exogenous measure of the cost of cigarettes than the state-specific price of a package of cigarettes and (2) that it is preferable to control for the effects of unmeasured variables that vary over time with the use of time dummies instead of...

The increased prevalence of obesity in the US stresses the need for answers as to why this rapid rise has occurred. This paper employs micro-level data from the First, Second, and Third National Health and Nutrition xamination Surveys to determine the effects that state-level policies have on BMI and obesity. These policies, which include restauran...

This paper highlights the influence of the new home economics in general and Jacob Mincer’s work in particular on the field of health economics. I begin by considering the value of time as a determinant of adult health and medical care utilization. I then turn to a similar treatment in the case of children’s health and medical care utilization. I c...

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 chil...

Introduction While there has been much discussion in recent years concerning the construction of hospital quality indexes, researchers have often failed to adequately test these quality measures against testable hypotheses. Our objective is to create a quality index using a fixed-effects methodology (FE-score) and use the resulting index to explain...

The problems of teen pregnancy, HIV/AIDS and the high rates of other sexually transmitted diseases among youth have lead to widespread concern with the sexual behaviors of teenagers. Alcohol use is one of the most commonly cited correlates of risky sexual behavior. The purpose of this research is to investigate the causal role of alcohol in determi...

Risky sexual behaviors by teenagers have shown to be strongly correlated with drug and alcohol consumption. The purpose of this study is to examine the question of whether alcohol and drug use increases the likelihood that teenagers will engage in four risky sexual behaviors: having sex, sex with multiple partners, sex without a condom, and sex wit...

I discuss economic approaches to the demand for harmfully addictive substances with an emphasis on the role of money prices. First, I examine trends in the real prices and in the prevalence of the use of cigarettes, alcohol, cocaine, heroin, and marijuana in the U.S.A. Then I present estimates of time-series demand functions. Next, I discuss how ec...

The purpose of this chapter is to examine the role of alcohol policies in reducing the incidence of sexually transmitted diseases (STDs) among youth. Previous research has shown that risky sexual practices (e.g., unprotected sex and multiple partners) that increase the risk of contracting an STD are highly correlated with alcohol use. If alcohol is...

While there has been much discussion in recent years concerning the construction of hospital quality indexes, researchers have often failed to adequately test these quality measures against testable hypotheses. Our objective is to create a quality index using a fixed-effects methodology (FE-score) and use the resulting index to explain price variat...

This paper concentrates on both the positive and normative effects of punishments that enforce laws to make production and consumption of particular goods illegal, with illegal drugs as the main example. Optimal public expenditures on apprehension and conviction of illegal suppliers obviously depend on the extent of the difference between the socia...

This paper examines the factors that may be responsible for the 50% increase in the number of obese adults in the US since the late 1970s. We employ the 1984-1999 Behavioral Risk Factor Surveillance System, augmented with state level measures pertaining to the per capita number of fast-food and full-service restaurants, the prices of a meal in each...

The paper examines price discounting by health maintenance organizations (HMOs) and preferred provider organizations (PPOs) in markets for hospital services. Our empirical analysis focuses on transaction prices for angioplasty, which is a relatively common procedure with well-defined "product" characteristics. After controlling for patient and proc...

It is generally assumed that managed care has been successful at capturing discounts from medical providers, but the implications have been a matter of debate. Critics argue that managed care organizations attain savings by reducing intensity of services, while others have argued that savings are 'real' and are a consequence of discounts per unit o...

Numerous studies have documented a strong correlation between substance use and teen sexual behavior, and this empirical relationship has given rise to a widespread belief that substance use causes teens to engage in risky sex. This causal link is often used by advocates to justify policies targeted at reducing substance use. Here, we argue that pr...

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This paper highlights the influence of the new home economics in general and Jacob Mincer's work in particular on the field of health economics. I begin by considering the value of time as a determinant of adult health and medical care utilization. I then turn to a similar treatment in the case of children's health and medical care utilization. I c...

Recent analyses suggest that cigarette excise taxes lower prenatal smoking. It is unclear, however, whether the association between taxes and prenatal smoking represents a decline among women of reproductive age or a particular response by pregnant women. We address this question directly with an analysis of quit and relapse behavior during and aft...

This purpose of this paper is to examine the causal impact of substance use on risky sexual behaviors by teenagers. Risky sexual behaviors, which include unprotected sex and multiple partners, are highly correlated with alcohol and illicit drug use, although the nature of the causal relationship is in question. This study uses two-stage least squar...

The period from the 1980s to the present has witnessed a lively and unsettled debate concerning the legalization of marijuana, cocaine, heroin, and other illicit substances in the United States. Proponents of legalization argue that the demand for these harmful and potentially addictive substances is not responsive to price. Opponents argue that pr...

The most fundamental law of economics links the price of a product to the demand for that product. Accordingly, increases in the monetary price of alcohol (i.e., through tax increases) would be expected to lower alcohol consumption and its adverse consequences. Studies investigating such a relationship found that alcohol prices were one factor infl...

Statistics from the National Household Survey on Drug Abuse show that current use of illicit drugs among U.S youths (12–17 years of age) doubled from an historic low in 1992 of 5.3 percent to 11.4 percent in 1997 before falling to 9.9 percent in 1998. Data from the Monitoring the Future study (MTF study) yielded even higher estimates of use and a s...

This chapter contains a detailed treatment of the human capital model of the demand for health which was originally developed in 1972. Theoretical predictions are discussed, and theoretical extensions of the model are reviewed. Empirical research that tests the predictions of the model or studies causality between years of formal schooling complete...

There is no doubt that smoking is damaging global health on an unprecedented scale. However, there is continuing debate on the economics of tobacco control, including the costs and consequences of tobacco control policies. This book aims to fill the analytic gap around this debate This book brings together a set of critical reviews of the current s...

This paper contains the first estimates of the price sensitivity of the prevalence of youth marijuana use. Survey data on marijuana use by high school seniors from the Monitoring the Future Project are combined with data on marijuana prices and potency from the Drug Enforcement Administration Office of Intelligence or Intelligence Division. Our est...

The purpose of this paper is to examine the effects of alcohol regulation on physical child abuse. Given the positive relationship between alcohol consumption and violence, and the negative relationship between consumption and price, the principal hypothesis to be tested is that an increase in the price of alcohol will lead to a reduction in the in...

During the decade 1983-1992, approximately $1.4 trillion of municipal bonds were sold in 87, 000 in separate issues, primarily to finance capital projects for education, electric power, transportation, health care, housing, and other public and private purpose activities. Approximately two-thirds of these financings were originated by financing aut...

We explore the effects of two kinds of competition on the cost of capital in the tax-exempt bond market: (1) competition amongst underwriters and (2) competition amongst issuers (most of which are quasi-public special authorities sanctioned by state governments). The first kind of competition--essentially, competitive versus negotiated bidding proc...

This study focuses on the effects of variations in alcoholic beverage prices among states of the United States on violence on college campuses. The principal hypothesis tested is that the incidence of violence is negatively related to the price of alcohol. This hypothesis is derived from two well established relationships: the positive relationship...

This paper contains a detailed treatment of the human capital model of the demand for health. Theoretical predictions are discussed, and theoretical extensions are reviewed. Empirical research that tests the predictions of the model or studies causality between years of formal schooling completed and good health is surveyed. The model views health...

We build on precedents from other health research to present a phases model of research for alcohol problem prevention that accommodates the special characteristics of this research. We propose a five-level model, in which research moves along a series of relevant continua: from basic to more and more applied research; from descriptive hypothesis-g...

Conventional wisdom once held that the demand for addictive substances like cigarettes, alcohol, and drugs was unlike that for any other economic good and, therefore, unresponsive to traditional market forces. Recently, however, researchers from two disparate fields, economics and behavioral psychology, have found that increases in the overall pric...

During the decade 1983-1992, approximately 1.4 trillion dollars of municipal bonds were sold in 87 thousand separate issues, primarily to finance capital projects for education, electric power, transportation, health care, housing and other public and private purpose activities. Approximately two-thirds of these financings were originated by financ...

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 Administration's System to Retrieve Information from Drug Evidence. Results suggest that annual participation and frequency of use given participation ar...

The purpose of this paper is to examine the effects of alcohol regulation on physical child abuse. Given the established relationship between alcohol consumption and violence, the principal hypothesis to be tested is that an increase in the price of alcohol will lead to a reduction in the incidence of violence. We also examine the effects of measur...

In economic analyses of addictive behavior, the consumption of a certain good is termed to be an addiction if an increase in past consumption of the good leads to an increase in current consumption. From policy, legal, and public health perspectives, addictive goods are of interest because the consumption of many of these goods harms the consumer a...

In recent years, economists have paid much attention to the demand for alcohol and the negative externalities associated with excessive drinking. Largely ignored in the literature is the link between alcohol use and domestic violence. Given the established positive relationship between alcohol consumption and acts of violence, the purpose of this p...

In recent years, the debate over the costs and benefits of legalizing the use of currently illicit drugs has been revived. This paper attempts to inform this debate by providing some evidence on the effects of illicit drug prices and legal sanctions for drug possession and sale on youth drug use. Data on cocaine and marijuana use by high school sen...