A lot of textbooks say that demand for insulin is perfectly inelastic. I don’t think this is quite true (and I am a type 1 diabetic). It’s clearly very inelastic, but not perfectly so. There are things you can do to reduce your insulin intake, e.g. eat less carbohydrates.

I’m curious if any studies have actually gone out and measured this…


1 Answer 1


You are right! Textbooks are probably not careful enough.

However, there is evidence that the most inelastic drugs are those indicated for the treatment of chronic diseases with price-elasticity ranging form -0.08 to -0.03 [see here], while studies establish a general inelastic price-elasticity of drugs of around -0.2 (here). In the same Plos One paper, therapeutic groups are sorted by price-elasticity and the diabetes group is ranked third behind cardiovascular and endocrine diseases (see Figure 1).

  • $\begingroup$ Thanks! They write For chronic conditions prescription drugs, the price elasticity is -0.08 (-0.03) for those whose pre-retirement co-payment is 10% (less than 10%) That suggests that elasticity increases as the co-payment increases, meaning that when it hits 100% it's likely to be significantly larger (in magnitude) than -0.08. -0.2 seems plausible. $\endgroup$
    – Mohan
    Commented Aug 20, 2020 at 11:36
  • 2
    $\begingroup$ @Mohan "That suggests that elasticity increases as the co-payment increases"---that is not a correct interpretation of the empirical design. They do not estimate the demand elasticity conditional on a co-payment amount. The pre-retirement vs. post-retirement difference in co-payment (10% vs 100%) is used to identify variation in demand. External validity (to the extent it is reasonable to claim such) would imply that, in a world with copayment difference of 50% vs 100%, one would obtain estimated elasticity in the same ballpark. $\endgroup$
    – Michael
    Commented Aug 21, 2020 at 9:05

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