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Demographic Differentials in the Demand for Alcohol and Illicit Drugs

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  • Henry Saffer
  • Frank Chaloupka

Abstract

The purpose of this paper is to estimate demographic differentials in alcohol and illicit drug use, participation, own price effects and cross price effects. This paper uses a data set of over 49,000 individuals from the National Household Survey of Drug Abuse and links drug and alcohol prices and policies to the individual records. The size of this data set makes it possible to estimate use, participation and demand curves for specific demographic groups. Public policies designed to reduce substance abuse have been oriented towards increasing the price of alcohol and illicit drugs. Little, however, is known about the relative responsiveness of various demographic groups to these policies. The data show that racial and ethnic minorities consume more cocaine, but consume less or equal amounts of alcohol, marijuana and heroin than the total population. The results also show a consistent pattern of negative own price effects for alcohol and illicit drugs and complimentarity between alcohol and illicit drugs. The own price effects did not differ substantially between demographic groups suggesting that price policies have a similar effect on all demographic groups. The pattern of complimentarity between alcohol and illicit drugs suggest that alcohol taxes also reduce drug use.

Suggested Citation

  • Henry Saffer & Frank Chaloupka, 1998. "Demographic Differentials in the Demand for Alcohol and Illicit Drugs," NBER Working Papers 6432, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:6432
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    1. Sickles, Robin & Taubman, Paul, 1991. "Who Uses Illegal Drugs?," American Economic Review, American Economic Association, vol. 81(2), pages 248-251, May.
    2. Frank J. Chaloupka & Adit Laixuthai, 1997. "Do Youths Substitute Alcohol and Marijuana? Some Econometric Evidence," Eastern Economic Journal, Eastern Economic Association, vol. 23(3), pages 253-276, Summer.
    3. Saffer, Henry & Chaloupka, Frank, 1999. "The Demand for Illicit Drugs," Economic Inquiry, Western Economic Association International, vol. 37(3), pages 401-411, July.
    4. 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.
    5. 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.
    6. 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.
    7. Kenkel, Donald S, 1993. "Drinking, Driving, and Deterrence: The Effectiveness and Social Costs of Alternative Policies," Journal of Law and Economics, University of Chicago Press, vol. 36(2), pages 877-913, October.
    8. 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.
    9. 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 261-279, April.
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