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The Effects of Prices and Policies on the Demand for Marijuana: Evidence from the National Household Surveys on Drug Abuse

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  • Matthew C. Farrelly
  • Jeremy W. Bray
  • Gary A. Zarkin
  • Brett W. Wendling
  • Rosalie Liccardo Pacula

Abstract

Recent studies have shown that efforts to curb alcohol use by increasing the price of alcohol and limiting youth's access have succeeded, but they may have had the unintended consequencce of increasing marijuana use. This possibility is troubling in light of a recent government report that shows that marijuana use among teens more than doubled between 1990 and 1997. What impact will the proposed large increase in cigarette prices have on the demand for other substances such as marijuana? To better understand how the demand for marijuana responds to changes in the policies and prices that affect its use, we explore the National Household Survy on Drug Abuse (NHSDA). Overall, we find that marijuana, alcohol, and tobacco are complements, sot that increasing the price of any one will decrease the demand for marijuana. The results of this paper will help guide the creation of comprehensive policies that curb the use of marijuana in two ways: first, they quantify the effects of policies aimed at curbing the use of each substance, allowing policymakers to evaluate alternative policy options; and second, they clarify the dynamics and interactions between alcohol, tobacco, and marijuana use in response to government policies.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6940.

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Date of creation: Feb 1999
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Handle: RePEc:nbr:nberwo:6940

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  1. Frank J. Chaloupka & Rosalie Liccardo Pacula & Matthew C. Farrelly & Lloyd D. Johnston & Patrick M. O'Malley, 1999. "Do Higher Cigarette Prices Encourage Youth to Use Marijuana?," NBER Working Papers 6939, National Bureau of Economic Research, Inc.
  2. John DiNardo & Thomas Lemieux, 1992. "Alcohol, Marijuana, and American Youth: The Unintended Effects of Government Regulation," NBER Working Papers 4212, National Bureau of Economic Research, Inc.
  3. Manning, Willard G. & Blumberg, Linda & Moulton, Lawrence H., 1995. "The demand for alcohol: The differential response to price," Journal of Health Economics, Elsevier, Elsevier, vol. 14(2), pages 123-148, June.
  4. Frank J. Chaloupka & Henry Wechsler, 1996. "Binge Drinking In College: The Impact Of Price, Availability, And Alcohol Control Policies," Contemporary Economic Policy, Western Economic Association International, vol. 14(4), pages 112-124, October.
  5. Frank J. Chaloupka & Adit Laixuthai, 1997. "Do Youths Substitute Alcohol and Marijuana? Some Econometric Evidence," Eastern Economic Journal, Eastern Economic Association, vol. 23(3), pages 253-276, Summer.
  6. William N. Evans & Matthew C. Farrelly & Edward Montgomery, 1996. "Do Workplace Smoking Bans Reduce Smoking?," NBER Working Papers 5567, National Bureau of Economic Research, Inc.
  7. Henry Saffer & Frank Chaloupka, 1998. "Demographic Differentials in the Demand for Alcohol and Illicit Drugs," NBER Working Papers 6432, National Bureau of Economic Research, Inc.
  8. Pacula, Rosalie Liccardo, 1998. "Does increasing the beer tax reduce marijuana consumption?," Journal of Health Economics, Elsevier, Elsevier, vol. 17(5), pages 557-585, October.
  9. Duan, Naihua, et al, 1983. "A Comparison of Alternative Models for the Demand for Medical Care," Journal of Business & Economic Statistics, American Statistical Association, American Statistical Association, vol. 1(2), pages 115-26, April.
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Cited by:
  1. Jofre-Bonet, Mireia & Petry, Nancy M., 2008. "Trading apples for oranges?: Results of an experiment on the effects of Heroin and Cocaine price changes on addicts' polydrug use," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 66(2), pages 281-311, May.
  2. Rosalie Liccardo Pacula & Jamie F. Chriqui & Joanna King, 2003. "Marijuana Decriminalization: What does it mean in the United States?," NBER Working Papers 9690, National Bureau of Economic Research, Inc.
  3. Kenneth Clements & Yihui Lan & Xueyan Zhao, 2010. "The demand for marijuana, tobacco and alcohol: inter-commodity interactions with uncertainty," Empirical Economics, Springer, Springer, vol. 39(1), pages 203-239, August.
  4. Crost, Benjamin & Guerrero, Santiago, 2012. "The effect of alcohol availability on marijuana use: Evidence from the minimum legal drinking age," Journal of Health Economics, Elsevier, Elsevier, vol. 31(1), pages 112-121.
  5. Sen, Bisakha & Agarwal, Rajshree & Hofler, Richard, 2002. "Teenage Indulgence in Cigarettes, Alcohol and Marijuana: Evidence of a "Gateway" Effect," Working Papers, University of Illinois at Urbana-Champaign, College of Business 02-0103, University of Illinois at Urbana-Champaign, College of Business.
  6. Rosalie Liccardo Pacula & Michael Grossman & Frank J. Chaloupka & Patrick M. O’Malley & Lloyd D. Johnston & Matthew C. Farrelly, 2001. "Marijuana and Youth," NBER Chapters, in: Risky Behavior among Youths: An Economic Analysis, pages 271-326 National Bureau of Economic Research, Inc.
    • R. L. Pacula & M. Grossman & F. J. Chaloupka & P. M. O'Malley & L. Johnston & M. C. Farrelly, 2000. "Marijuana and Youth," NBER Working Papers 7703, National Bureau of Economic Research, Inc.
  7. Clifford F. Thies, 2012. "The Relationship Between Enforcement and the Price of Marijuana," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 28(Fall 2012), pages 79-90.
  8. Sara Markowitz, 2001. "The Role of Alcohol and Drug Consumption in Determining Physical Fights and Weapon Carrying by Teenagers," Eastern Economic Journal, Eastern Economic Association, vol. 27(4), pages 409-432, Fall.
  9. Anderson, D. Mark & Rees, Daniel I., 2012. "Per Se Drugged Driving Laws and Traffic Fatalities," IZA Discussion Papers 7048, Institute for the Study of Labor (IZA).
  10. Dee, Thomas S., 1999. "The complementarity of teen smoking and drinking," Journal of Health Economics, Elsevier, Elsevier, vol. 18(6), pages 769-793, December.
  11. Kenneth W Clements & Yihui Lan & Xueyan Zhao, 2006. "The Demand for Vice: Inter-Commodity Interactions with Uncertainty," Economics Discussion / Working Papers, The University of Western Australia, Department of Economics 06-30, The University of Western Australia, Department of Economics.
  12. Carlos Casacuberta & Mariana Gerstenblüth & Patricia Triunfo, 2012. "Aportes del análisis económico al estudio de las drogas," Documentos de Trabajo (working papers), Department of Economics - dECON 0112, Department of Economics - dECON.
  13. Markowitz, Sara, 2005. "Alcohol, Drugs and Violent Crime," International Review of Law and Economics, Elsevier, Elsevier, vol. 25(1), pages 20-44, March.
  14. DiNardo, John & Lemieux, Thomas, 2001. "Alcohol, marijuana, and American youth: the unintended consequences of government regulation," Journal of Health Economics, Elsevier, Elsevier, vol. 20(6), pages 991-1010, November.
  15. Jenny Williams & Rosalie Liccardo Pacula & Frank J. Chaloupka & Henry Wechsler, 2001. "Alcohol and Marijuana Use Among College Students: Economic Complements or Substitutes?," NBER Working Papers 8401, National Bureau of Economic Research, Inc.

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