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IOS Discussion Paper

This paper estimates the effects of prices on demand for alcohol, marijuana, cocaine, and heroin using a new nationally representative drug use dataset. It finds that increasing the prices of these substances reduces their use, with heroin demand being most price-elastic. The paper also finds that decriminalizing marijuana increases the probability of using it by 8% and that higher cocaine and heroin prices reduce the use of those drugs as well as alcohol, contradicting theories about progression of drug use.

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46 views10 pages

IOS Discussion Paper

This paper estimates the effects of prices on demand for alcohol, marijuana, cocaine, and heroin using a new nationally representative drug use dataset. It finds that increasing the prices of these substances reduces their use, with heroin demand being most price-elastic. The paper also finds that decriminalizing marijuana increases the probability of using it by 8% and that higher cocaine and heroin prices reduce the use of those drugs as well as alcohol, contradicting theories about progression of drug use.

Uploaded by

anirbanmbe
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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THE DEMAND FOR ILLICIT DRUGS

HENRY SAFFER and FRANK CHALOUPKA


(1999)
Economic inquiry, 37(3), 401-411.
Main question of Interest
This paper estimates the effects of alcohol prices,
marijuana decriminalization, cocaine prices, and
heroin prices on the demand for these four
substances.
Both own price effects and cross price effects are
estimated
First paper to use newly available nationally
representative drug use data set
Policy implication
RCT issues
Legal issue
Ethical issue
What is being estimated?
Price elasticity :
Alcohol : - .30
Cocaine: - 0.28
Heroin: - 0.94
Marijuana decriminalization increases he
probability of marijuana participation by 8%

Results
Results
Results
Results
Causality & Results
Omitted variables:
- Family history
- Friend circle
- BMI
- Characteristics
- Availability
Issues with alcohol price
Results
Results contradicts the gateway or domino theory of
drug use

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