The demand for health, alcohol abuse, and labor market outcomes: a longitudinal study

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Keng, Shao-Hsun
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Wallace E. Huffman
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The Department of Economic Science was founded in 1898 to teach economic theory as a truth of industrial life, and was very much concerned with applying economics to business and industry, particularly agriculture. Between 1910 and 1967 it showed the growing influence of other social studies, such as sociology, history, and political science. Today it encompasses the majors of Agricultural Business (preparing for agricultural finance and management), Business Economics, and Economics (for advanced studies in business or economics or for careers in financing, management, insurance, etc).

The Department of Economic Science was founded in 1898 under the Division of Industrial Science (later College of Liberal Arts and Sciences); it became co-directed by the Division of Agriculture in 1919. In 1910 it became the Department of Economics and Political Science. In 1913 it became the Department of Applied Economics and Social Science; in 1924 it became the Department of Economics, History, and Sociology; in 1931 it became the Department of Economics and Sociology. In 1967 it became the Department of Economics, and in 2007 it became co-directed by the Colleges of Agriculture and Life Sciences, Liberal Arts and Sciences, and Business.

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  • Department of Economic Science (1898–1910)
  • Department of Economics and Political Science (1910-1913)
  • Department of Applied Economics and Social Science (1913–1924)
  • Department of Economics, History and Sociology (1924–1931)
  • Department of Economics and Sociology (1931–1967)

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Becker and Murphy (1988) presented a rational addiction theory to rationalize the behavior of addiction. This dissertation extends rational addiction theory to examine the hypothesis of rational addiction and the long-term impact of addiction on labor productivity and labor supply. The theoretical model explicitly considers investment in health, drug consumption, and labor supply as joint decision variables, and treats wage as the outcome of these decisions. A simultaneous framework is empirically estimated to test the forward-looking hypothesis and the government policies are evaluated by simulation. The data set is the National Longitudinal Survey of Youth Cohort (1979--1994);The results show that there is a trade off between the demand for health and the occasions of binge drinking. Youths reduce their occasions of binge drinking when they increase the demand for health, and vice versa. The finding supports the forward-looking hypothesis and that heavy drinking is addictive. Furthermore, we found a statistically weak effect of the alcohol price on the demand for binge drinking, and the long run alcohol price elasticity of the probability of heavy drinking, binge drinking, and no binge drinking are relatively small, -0.24, 0.03, and 0.21, respectively. The short run price elasticities are -0.09, 0.01, and 0.08, respectively. The results suggest that the demand for binge drinking is not price responsive in the short run or long run;Continued binge drinking results in lower wage and health profiles, whereas it does not have significant impact on hours worked. Policy simulations show that increasing alcohol price by 100% decreases the occasions of binge drinking by only 5%, but raising the minimum legal drinking age one year reduces the occasions of binge drinking among underage youths by about 5%. The effect of increasing the alcohol price and the minimum drinking age on health status, hours worked, and log wage are positive, however, their magnitudes are small. Our results suggest that policy makers should focuses on affecting the age at which young people start drinking and taxing alcohol is a relatively inefficient policy for achieving this.

Thu Jan 01 00:00:00 UTC 1998