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- W1501716684 abstract "If public funds are allocated efficiently, then an increase in expenditures should improve the performance of substance abuse treatment programs. However, the unconditional correlation between performance and expenditures per patient is non-positive in the data sets used in this paper. One explanation for this seemingly surprising result is that programs that treat more difficult patients receive more resources per patient. This paper addresses this potential endogenity both theoretically and empirically. It asks whether the fraction of patients that are abstinent 30 days prior to their discharge is affected by resources. We use data from outpatient drug-free programs that received public funding from the state of Maine between 1991 and 1994. A formal model of the allocation of public funds across treatment programs shows that the endogeneity of funds can lead to underestimation of their marginal impact on performance. The model produces a system of structural equations with cross-equation restrictions. Maximum likelihood estimation of this system gives parameter estimates that strongly reject the restrictions. The model may fail either because it is incorrect or because their are omitted variables correlated with expenditures per patients. Both problems are avoided by estimating only a single equation and using instrumental variables to control for omitted variables. This approach has the additional advantage of controlling for fixed effects without introducing estimation bias. Both the structural and instrumental variable estimates indicate that the marginal impact of spending per patient on performance is very small and, in general, not statistically different from zero." @default.
- W1501716684 created "2016-06-24" @default.
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- W1501716684 date "1998-01-01" @default.
- W1501716684 modified "2023-09-27" @default.
- W1501716684 title "Dollars and Performance: Cost Effectiveness of Substance Abuse Treatment in Maine" @default.
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- W1501716684 doi "https://doi.org/10.2139/ssrn.57707" @default.
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