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The effects of price and policy on marijuana use: what can be learned from the Australian experience?

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  • J. Williams

    (Department of Economics, University of Melbourne, Parkville, Australia)

Abstract

This research examines the responsiveness of the demand for marijuana to changes in its money price and criminal status using data on individuals from the Australian National Drug Strategy's Household Surveys (NDSHS). The results suggest that both the prevalence of marijuana use and the conditional demand for marijuana in the general population are responsive to changes in its money price. Significant differences are found in the effect of price on participation in marijuana use across age-groups, with participation by youth more price sensitive than participation by older age-groups. Similarly, the effect of the legal status of marijuana use on the participation decision is found to differ across age-groups and gender. Specifically, decriminalisation is associated with an increases in the prevalence of use by males over the age of 25. There is no evidence that decriminalisation significantly increases participation in marijuana use by either young males or females, or that decriminalisation increases the frequency of use among marijuana users. Copyright © 2003 John Wiley & Sons, Ltd.

Suggested Citation

  • J. Williams, 2004. "The effects of price and policy on marijuana use: what can be learned from the Australian experience?," Health Economics, John Wiley & Sons, Ltd., vol. 13(2), pages 123-137.
  • Handle: RePEc:wly:hlthec:v:13:y:2004:i:2:p:123-137 DOI: 10.1002/hec.796
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    References listed on IDEAS

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    1. Patrick M. O'Malley & Michael Grossman & Frank J. Chaloupka, 2001. "Marijuana and Youth," NBER Chapters,in: Risky Behavior among Youths: An Economic Analysis, pages 271-326 National Bureau of Economic Research, Inc.
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    2. Frank J. Chaloupka & Michael Grossman & John A. Tauras, 1999. "The Demand for Cocaine and Marijuana by Youth," NBER Chapters,in: The Economic Analysis of Substance Use and Abuse: An Integration of Econometrics and Behavioral Economic Research, pages 133-156 National Bureau of Economic Research, Inc.
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    4. DiNardo, John & Lemieux, Thomas, 2001. "Alcohol, marijuana, and American youth: the unintended consequences of government regulation," Journal of Health Economics, Elsevier, vol. 20(6), pages 991-1010, November.
    5. 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.
    6. Henry Saffer & Frank J. Chaloupka, 1999. "Demographic Differentials in the Demand for Alcohol and Illicit Drugs," NBER Chapters,in: The Economic Analysis of Substance Use and Abuse: An Integration of Econometrics and Behavioral Economic Research, pages 187-212 National Bureau of Economic Research, Inc.
    7. Nisbet, Charles T & Vakil, Firouz, 1972. "Some Estimates of Price and Expenditure Elasticities of Demand for Marijuana Among U.C.L.A. Students," The Review of Economics and Statistics, MIT Press, vol. 54(4), pages 473-475, November.
    8. Farrelly, Matthew C. & Bray, Jeremy W. & Zarkin, Gary A. & Wendling, Brett W., 2001. "The joint demand for cigarettes and marijuana: evidence from the National Household Surveys on Drug Abuse," Journal of Health Economics, Elsevier, vol. 20(1), pages 51-68, January.
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    Cited by:

    1. van Ours, Jan C. & Williams, Jenny, 2007. "Cannabis prices and dynamics of cannabis use," Journal of Health Economics, Elsevier, vol. 26(3), pages 578-596, May.
    2. 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.
    3. Clements, Kenneth W. & Daryal, Mert, 2005. "Exogenous shocks and related goods: Drinking and the legalisation of marijuana," Economics Letters, Elsevier, vol. 89(1), pages 101-106, October.
    4. Sarah Brown & Mark N Harris & Jake Prendergast & Preety Srivastava, 2015. "Pharmaceutical Drug Misuse, Industry of Employment and Occupation," Bankwest Curtin Economics Centre Working Paper series WP1501, Bankwest Curtin Economics Centre (BCEC), Curtin Business School.
    5. 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.
    6. Anne Bretteville-Jensen, 2006. "Drug Demand – Initiation, Continuation and Quitting," De Economist, Springer, vol. 154(4), pages 491-516, December.
    7. Adam J. Davis & Karl R. Geisler & Mark W. Nichols, 2016. "The price elasticity of marijuana demand: evidence from crowd-sourced transaction data," Empirical Economics, Springer, vol. 50(4), pages 1171-1192, June.
    8. Pudney, Stephen & Bryan, Mark & DelBono, Emilia, 2013. "Licensing and regulation of the cannabis market in England and Wales: Towards a cost-benefit analysis," MPRA Paper 50365, University Library of Munich, Germany.
    9. Xueyan Zhao & Mark Harris, 2004. "Modelling Tobacco Consumption with a Zero-Inflated Ordered Probit Model," Econometric Society 2004 Australasian Meetings 363, Econometric Society.
    10. Williams, Jenny & Bretteville-Jensen, Anne Line, 2014. "Does liberalizing cannabis laws increase cannabis use?," Journal of Health Economics, Elsevier, vol. 36(C), pages 20-32.
    11. Adam J. Davis & Mark W. Nichols, 2013. "The Price Elasticity of Marijuana Demand," Working Papers 13-004, University of Nevada, Reno, Department of Economics;University of Nevada, Reno , Department of Resource Economics.
    12. D. Mark Anderson & Benjamin Hansen & Daniel I. Rees, 2015. "Medical Marijuana Laws and Teen Marijuana Use," American Law and Economics Review, Oxford University Press, vol. 17(2), pages 495-528.

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