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Addiction, Thick Market Externalities, and the Persistence of the Opioid Epidemic

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  • David M. Cutler
  • J. Travis Donahoe

Abstract

U.S. opioid overdose death rates rose nearly continuously from 1990 to 2022, claiming over 750,000 lives. The persistence of the epidemic is surprising, as policy and behavioral responses to the epidemic would be expected to reduce harm. We examine four explanations for why death rates instead rose so greatly and for so long: exogenous and continuing increases in demand or supply of opioids, dynamic spillovers stemming from prescription opioid addiction, and spatial spillovers due to thick market externalities. We find that spillovers across time and space are the main explanation. Without them, there would have been 88 percent fewer deaths.

Suggested Citation

  • David M. Cutler & J. Travis Donahoe, 2024. "Addiction, Thick Market Externalities, and the Persistence of the Opioid Epidemic," NBER Working Papers 32055, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:32055
    Note: AG EH PE
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    More about this item

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior

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