Welfare Checks, Drug Consumption, and Health

Abstract

This paper investigates the link between welfare payments and drug use among injection drug users. We find an increase in the likelihood of an overdose in the days following check arrival, and in the probability of leaving the hospital against medical advice (AMA) on check day. Using the check arrival date as an instrument, we estimate the Local Average Treatment Effect of leaving AMA on subsequent readmission and the probability of a drug overdose. The results indicate that, for individuals influenced by check day, leaving AMA leads to readmission much sooner than planned discharge, longer subsequent stays in the hospital, and a substantial increase in the probability of a drug overdose.