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The Demand for Cocaine and Marijuana by Youth

In: The Economic Analysis of Substance Use and Abuse: An Integration of Econometrics and Behavioral Economic Research

  • Frank J. Chaloupka
  • Michael Grossman
  • John A. Tauras

In recent years, the debate over the costs and benefits of legalizing the use of currently illicit drugs has been revived. This paper attempts to inform this debate by providing some evidence on the effects of illicit drug prices and legal sanctions for drug possession and sale on youth drug use. Data on cocaine and marijuana use by high school seniors are taken from the 1982 and 1989 Monitoring the Future surveys. Site-specific data on cocaine prices and legal sanctions for the possession and sale, manufacture or distribution of cocaine and marijuana are added to the survey data. The results indicate that youth cocaine demand is sensitive to price, with average past year and past month cocaine demand elasticities of -1.28 and -1.43, respectively. In addition, the estimates suggest that increased sanctions for the possession of cocaine and marijuana have a negative and statistically significant impact on youth cocaine and marijuana use. However, the magnitude of these estimates implies that very large increases in the monetary fines that can be imposed for first offense possession would be necessary to achieve meaningful reductions in use. Finally, sanctions for the sale, manufacture or distribution of cocaine and marijuana were found to have little impact on youth cocaine and marijuana use.

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This chapter was published in:
  • Frank J. Chaloupka & Michael Grossman & Warren K. Bickel & Henry Saffer, 1999. "The Economic Analysis of Substance Use and Abuse: An Integration of Econometrics and Behavioral Economic Research," NBER Books, National Bureau of Economic Research, Inc, number chal99-1, March.
  • This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 11158.
    Handle: RePEc:nbr:nberch:11158
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    1. 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 473-75, November.
    2. van Ours, Jan C, 1995. "The Price Elasticity of Hard Drugs: The Case of Opium in the Dutch East Indies, 1923-1938," Journal of Political Economy, University of Chicago Press, vol. 103(2), pages 261-79, April.
    3. Silverman, Lester P. & Spruill, Nancy L., 1977. "Urban crime and the price of heroin," Journal of Urban Economics, Elsevier, vol. 4(1), pages 80-103, January.
    4. DiNardo, J. & Lemieux, T., 1992. "Appendix Table for: Alcohol, Marijuana and American Youth: The Unintented Consequences of Government Regulation," Papers 92-17, California Irvine - School of Social Sciences.
    5. Gary S. Becker & Kevin M. Murphy, 1986. "A Theory of Rational Addiction," University of Chicago - George G. Stigler Center for Study of Economy and State 41, Chicago - Center for Study of Economy and State.
    6. Michael Grossman & Frank J. Chaloupka & Charles C. Brown, 1996. "The Demand for Cocaine by Young Adults: A Rational Addiction Approach," NBER Working Papers 5713, National Bureau of Economic Research, Inc.
    7. 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.
    8. Pacula, Rosalie Liccardo, 1998. "Does increasing the beer tax reduce marijuana consumption?," Journal of Health Economics, Elsevier, vol. 17(5), pages 557-585, October.
    9. Cragg, John G, 1971. "Some Statistical Models for Limited Dependent Variables with Application to the Demand for Durable Goods," Econometrica, Econometric Society, vol. 39(5), pages 829-44, September.
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