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Are Illegal Drugs Inferior Goods?

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  • Suryadipta Roy

    (West Virginia University)

Abstract

Using data from the National Survey on Drug Use and Health, evidence of income inferiority in illegal drug consumption is presented. This is done by estimation of binary choice probit models with endogenous regressors. The simultaneity issue between drug consumption and income has been addressed by using a two-step estimation procedure. The results indicate that accounting for simultaneity shows income inferiority with regard to drug consumption. An implication of this study is that income distributive policies might be effective in controlling drug consumption. It also points out the regressive nature of the government’s substance abuse program.

Suggested Citation

  • Suryadipta Roy, 2005. "Are Illegal Drugs Inferior Goods?," Working Papers 05-01old Classification- , Department of Economics, West Virginia University.
  • Handle: RePEc:wvu:wpaper:05-01old
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    File URL: http://be.wvu.edu/phd_economics/pdf/05-01old.pdf
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    References listed on IDEAS

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    1. Frank J. Chaloupka & Michael Grossman & Warren K. Bickel & Henry Saffer, 1999. "The Economic Analysis of Substance Use and Abuse: An Integration of Econometric and Behavioral Economic Research," NBER Books, National Bureau of Economic Research, Inc, number chal99-1, November.
    2. Saffer, Henry & Chaloupka, Frank, 1999. "The Demand for Illicit Drugs," Economic Inquiry, Western Economic Association International, vol. 37(3), pages 401-411, July.
    3. Donald S. Kenkel & Ping Wang, 1999. "Are Alcoholics in Bad Jobs?," NBER Chapters, in: The Economic Analysis of Substance Use and Abuse: An Integration of Econometric and Behavioral Economic Research, pages 251-278, National Bureau of Economic Research, Inc.
    4. Grossman, Michael & Chaloupka, Frank J., 1998. "The demand for cocaine by young adults: a rational addiction approach," Journal of Health Economics, Elsevier, vol. 17(4), pages 427-474, August.
    5. Andrew M. Gill & Robert J. Michaels, 1992. "Does Drug Use Lower Wages?," ILR Review, Cornell University, ILR School, vol. 45(3), pages 419-434, April.
    6. Murphy, Kevin M & Topel, Robert H, 2002. "Estimation and Inference in Two-Step Econometric Models," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(1), pages 88-97, January.
    7. Sickles, Robin & Taubman, Paul, 1991. "Who Uses Illegal Drugs?," American Economic Review, American Economic Association, vol. 81(2), pages 248-251, May.
    8. Becker, Gary S & Murphy, Kevin M, 1988. "A Theory of Rational Addiction," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 675-700, August.
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    Cited by:

    1. Jofre-Bonet, Mireia & Petry, Nancy M., 2008. "Trading apples for oranges?: Results of an experiment on the effects of Heroin and Cocaine price changes on addicts' polydrug use," Journal of Economic Behavior & Organization, Elsevier, vol. 66(2), pages 281-311, May.

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