Are Illegal Drugs Inferior Goods?
AbstractUsing data from the National Survey on Drug Use and Health, evidence of income inferiority in illegal drug consumption is presented. This is done by estimation of binary choice probit models with endogenous regressors. The simultaneity issue between drug consumption and income has been addressed by using a two-step estimation procedure. The results indicate that accounting for simultaneity shows income inferiority with regard to drug consumption. An implication of this study is that income distributive policies might be effective in controlling drug consumption. It also points out the regressive nature of the government’s substance abuse program.
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Bibliographic InfoPaper provided by Department of Economics, West Virginia University in its series Working Papers with number 05-01 Classification- JEL: I12, I18.
Length: 56 pages
Date of creation: 2005
Date of revision:
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income inferiority; illegal drugs; public policy;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-02-27 (All new papers)
- NEP-DCM-2005-02-27 (Discrete Choice Models)
- NEP-HEA-2005-02-27 (Health Economics)
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