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Substitutes or Complements? Alcohol, Cannabis and Tobacco

Listed author(s):
  • Lisa Cameron

    (University of Melbourne)

  • Jenny Williams

    (School of Economics, University of Adelaide)

This paper estimates the price responsiveness of cannabis, alcohol and cigarette use. Individual level data from four waves of the National Drug Strategy Household Survey are merged with previously unavailable state level data on cannabis prices, and ABS alcohol and tobacco price indices. In addition to own price effects, we estimate cross price effects and the impact of differing legal regimes for cannabis on the use of these three drugs. Establishing the nature of the interdependencies between cannabis, alcohol and cigarettes is important in the development of drug policy so that a policy directed at one drug does not unintentionally affect the'demand for other drugs. We find that participation in the use of all three drugs is responsive to own prices and that decriminalisation of cannabis leads to higher cannabis use. Cannabis is found to be a substitute for alcohol and a complement to tobacco. Alcohol and tobacco are found to be complements.

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Paper provided by University of Adelaide, School of Economics in its series School of Economics Working Papers with number 1999-02.

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Length: 28 pages
Date of creation: 1999
Publication status: Published in Economic Record, March 2001, vol. 77, issue 236, pp. 19–34 as ''Cannabis, Alcohol and Cigarettes: Substitutes or Complements?''
Handle: RePEc:adl:wpaper:1999-02
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