How Do Financial Conditions Affect Professional Conduct? Evidence from Opioid Prescriptions

We examine how healthcare providers’ opioid prescriptions are affected by changes in their home values, which proxy for shocks to their wealth. We find that providers increase opioid prescriptions when experiencing adverse financial conditions. Results are robust to including provider office–year fixed effects and using the subsample of providers who live far away from their offices, thereby largely ruling out a patient–demand explanation. Providers living in ZIP codes with price changes in the bottom half in 2007–2009 increased their opioid prescriptions in 2010–2012 by approximately 16% more than others. The effect is stronger among providers facing more provider competition and those serving vulnerable populations. Providers experiencing adverse financial conditions also receive more opioid-related payments from pharmaceutical companies. We also extend our analysis to ADHD medications, demonstrating a similar pattern of increased prescriptions under negative financial shocks, suggesting broader implications for other medical decisions. Our findings offer novel insights into professional conduct under personal financial pressure, with implications extending beyond healthcare.