“Rent Seeking for Madness: the Political Economy of Mental Asylums in the United States, 1870–401910114ya”, 2021-04-17 (; similar):
From the end of the Civil War to the onset of the Great War, the United States experienced an unprecedented increase in commitment rates for mental asylums. Historians and sociologists often explain this increase by noting that public sentiment called for widespread involuntary institutionalization to avoid the supposed threat of insanity to social well-being. However, that explanation neglects expanding rent seeking within psychiatry and the broader medical field over the same period. In this paper, we argue that stronger political influence from mental healthcare providers contributed substantially to the rise in institutionalization. We test our claim empirically with reference to the catalog of medical regulations 1870–401910114ya, as well as primary sources documenting rates of insanity at the state level. Our findings provide an alternative explanation for the historical rise in US institutionalizations.
[Keywords: rent-seeking, public health, American economic history, mental health, insanity]
…Between 1870 and 1910, institutionalization rates (per 100,000 persons) rose nearly 3× (see Figure 1).
…In this paper, we use a public choice framework to offer a complementary explanation for the rise in institutionalizations, which argues that the expansion of public asylums benefited asylum-based physicians. Although we emphasize political exchange rather than public interest, the 2 explanations are not necessarily antagonistic.3 They can be complements (2019, pp. 39–40). To illustrate such complementarity, consider the “bootleggers and Baptists” theory of regulation (1983; 2020). The “Baptists”, by means of public-interest justifications, propose a policy that offers laudable public benefits. The “bootleggers”, rent seekers who expect to profit, will support the policy. In the case of the asylum’s expansion, we will argue that rent seeking was in play. Progressive social reformers and voters (ie. the “Baptists”) saw the state asylum’s expansion as being in the public interest. Physicians and asylum superintendents (ie. the “bootleggers”), when well-organized, joined with the progressive social reformers and voters out of self-interest. In other words, public and private interest forces were not at odds with one another—they complemented each other in ways that caused asylums to expand.
…To assess whether asylum physicians were able to secure rents, we rely on state-level institutionalization rates 1870–401910114ya (provided by US Census Bureau documents) in conjunction with state-level legislation affecting entry into the medical profession (1984; 1979). The ability of the medical community of a given state to procure barriers to entry into the profession becomes a proxy for the effectiveness of physicians in the field of mental care in securing rents. Our assumption is that in states where physicians were politically weak, asylum physicians must have been weak as well (and thus unable to secure additional rents). While numerous laws were adopted to restrict entry, the most important one was the examining board.4 Those boards were enforcement entities that could set the conditions of entry and also amplify the effectiveness of most of the other laws. If the medical profession was too weak to get an examining board, it was too weak to capture most other potential rent sources.
…Our analysis finds that many entry-restriction laws (examining boards in particular) explain the rise of asylum populations from 1870–401910114ya. For example, the introduction of an examining board increased institutionalization rates by ~10–20%. The results control for state and year effects. They are robust to changes in how the institutionalized population is measured. Thus, a rent-seeking process was at play. This process dovetails well with public interest explanations of asylum expansion (1991).