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State Drug Control and Illicit Drug Participation

  • Henry Saffer
  • Frank Chaloupka

The purpose of this paper is to estimate the effect of state criminal justice expenditures and state public health expenditures on deterring illicit drug use. The empirical model is based on a demand and supply model of drug markets. The effect of a given expenditure on criminal justice or public health programs is dependent on the magnitude of the resulting shifts in the two functions and the demand price elasticity. A reduced form of the demand and supply model is also estimated. The data employed come from the 1990 and 1991 National Household Surveys on Drug Abuse (NHSDA). Data on state and local spending for drug related criminal justice and drug related public health programs were merged with the NHSDA. The main findings from the regression results are that drug control spending reduces drug use. However, the results suggest for marijuana users, the marginal cost of drug control exceeds the social benefits of drug control. This may not be the case for users of other illicit drugs. Spending for drug enforcement by police and drug treatment are found most effective in deterring drug use. However, spending for correctional facilities is never significant which suggests that a more efficient method of reducing drug use might be to reduce correctional facilities spending and increase spending on treatment.

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File URL: http://www.nber.org/papers/w7114.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7114.

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Date of creation: May 1999
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Publication status: published as H Saffer & FJ Chaloupka & D Dave, 2001. "State Drug Control Spending And Illicit Drug Participation," Contemporary Economic Policy, Western Economic Association International, vol. 19(2), pages 150-161, 04.
Handle: RePEc:nbr:nberwo:7114
Note: HE
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  1. 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.
  2. Anne Line Bretteville-Jensen & Matthew Sutton, 1996. "Under the influence of the market: an applied study of illicitly selling and consuming heroin," Working Papers 147chedp, Centre for Health Economics, University of York.
  3. Lee, Li Way, 1993. "Would Harassing Drug Users Work?," Journal of Political Economy, University of Chicago Press, vol. 101(5), pages 939-59, October.
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