State Funeral Regulations: Inside the Black Box

Journal of Regulatory Economics

May 13, 2015

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This study estimates the effects of state regulations affecting funeral markets. It accounts for multiple major categories of regulations and demand inducement as well as direct price effects. While concurring with prior studies that find ready-to-embalm regulations increase funeral costs and decrease the percentage of cremations, this study finds that several other state regulations are associated with significantly higher receipts per death. The regulation with the largest apparent effect on average funeral costs is the direct disposition license, which is associated with a $1250 reduction in receipts per death. Restrictive regulations affect the revenues of funeral homes and services to a much greater extent than they affect the revenues of cemeteries and crematories, and in some cases the regulations even increase funeral homes and services’ share of industry revenues. Thus, it appears that funeral homes receive most of the benefits of regulation.