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The Downward Spiral

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  • Jeremy Greenwood
  • Nezih Guner
  • Karen A. Kopecky

Abstract

To analyze the opioid epidemic, we construct a model where individuals, with and without pain, choose whether to misuse opioids knowing the probabilities of addiction and dying. These odds are functions of opioid use. Markov chains are estimated from the US data for the college and non–college educated that summarize the transitions into and out of opioid addiction as well as to a deadly overdose. We construct a structural model that matches the estimated Markov chains. We also examine the epidemic’s drivers and the impact of medical interventions.

Suggested Citation

  • Jeremy Greenwood & Nezih Guner & Karen A. Kopecky, 2022. "The Downward Spiral," FRB Atlanta Working Paper 2022-4, Federal Reserve Bank of Atlanta.
  • Handle: RePEc:fip:fedawp:94785
    DOI: 10.29338/wp2022-04
    Note: Francesco Chiocchio, Michele Federle, and Jordan Herring provided excellent research assistance. This working paper is a preliminary version of the research. The views expressed here are those of the authors and not necessarily those of the Federal Reserve Bank of Atlanta or the Federal Reserve System. Any remaining errors are the authors' responsibility.
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    Cited by:

    1. Jeremy Greenwood & Nezih Guner & Karen A. Kopecky, 2022. "Substance Abuse during the Pandemic: Implications for Labor-Force Participation," Economie d'Avant Garde Research Reports 35, Economie d'Avant Garde.
    2. Chaoran Chen & Zhigang Feng & Jiaying Gu, 2022. "Health, Health Insurance, and Inequality," Working Papers tecipa-730, University of Toronto, Department of Economics.
    3. Casey B. Mulligan, 2022. "Lethal Unemployment Bonuses? Substitution and Income Effects on Substance Abuse, 2020-21," NBER Working Papers 29719, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

    addiction; college/non–college educated; deaths; fentanyl; Markov chain; medical interventions; opioids; OxyContin; pain; prices; structural model;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income

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