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Heroin Consumption, Prices and Addiction: Evidence from Self-reported Panel Data

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  • Anne Line Bretteville-Jensen
  • Erik Bi¯rn

Abstract

Estimation models of drug demand should encompass the aspect of addiction. Here, we consider two static panel data regression models and two cross-section models with lags or leads in drug consumption as additional regressors. Heroin injectors attending a needle exchange service in Oslo were interviewed twice, with a one-year interval. Despite our relatively small sample, we obtain statistically significant price and income responses for nearly all of the models and specifications applied. The sample is split by dealing status, with dealers obtaining price elasticities in the range of [ -0.15, -1.51] and non-dealers [ -0.71, -1.69]. Somewhat surprisingly, the estimates of the variance of the latent individual-specific variable are rather low in the panel data models, although higher for non-dealers than for dealers. Copyright The editors of the "Scandinavian Journal of Economics", 2003 .

Suggested Citation

  • Anne Line Bretteville-Jensen & Erik Bi¯rn, 2003. "Heroin Consumption, Prices and Addiction: Evidence from Self-reported Panel Data," Scandinavian Journal of Economics, Wiley Blackwell, vol. 105(4), pages 661-679, December.
  • Handle: RePEc:bla:scandj:v:105:y:2003:i:4:p:661-679
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    Cited by:

    1. Jeffrey Clemens, 2008. "Opium in Afghanistan: Prospects for the Success of Source Country Drug Control Policies," Journal of Law and Economics, University of Chicago Press, vol. 51(3), pages 407-432, August.
    2. Kaili Shen & David Giles, 2006. "Rational exuberance at the mall: addiction to carrying a credit card balance," Applied Economics, Taylor & Francis Journals, vol. 38(5), pages 587-592.
    3. Robert E. Marks, 2013. "Increasing Marginal Revenue and Demand Elasticity," Discussion Papers 2013-27, School of Economics, The University of New South Wales.
    4. Hans Melberg & Andrew Jones & Anne Bretteville-Jensen, 2010. "Is cannabis a gateway to hard drugs?," Empirical Economics, Springer, vol. 38(3), pages 583-603, June.
    5. Anne Bretteville-Jensen, 2006. "Drug Demand – Initiation, Continuation and Quitting," De Economist, Springer, vol. 154(4), pages 491-516, December.
    6. Johanna Catherine Maclean & Jonathan H. Cantor & Rosalie Liccardo Pacula, 2015. "Economic downturns and substance abuse treatment: Evidence from admissions data," DETU Working Papers 1504, Department of Economics, Temple University.
    7. Olmstead, Todd A. & Alessi, Sheila M. & Kline, Brendan & Pacula, Rosalie Liccardo & Petry, Nancy M., 2015. "The price elasticity of demand for heroin: Matched longitudinal and experimental evidence," Journal of Health Economics, Elsevier, vol. 41(C), pages 59-71.

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