The focus of this project is on the effects of price on illegal drug use. The primary aims revolve around the sensitivity of cocaine, heroin, and marijuana consumption to differences in the prices of these illegal substances. Here we emphasize """"""""own-price"""""""" effects: the change in cocaine consumption caused by a change in the price of cocaine, the change in heroin consumption caused by a change in the price of heroin, and the change in marijuana consumption caused by a chance in the price of marijuana. The """"""""full"""""""" price of an illegal drug includes the money price and the expected penalties for possession and use; and the effects of both components are considered.
One specific aim i s to investigate the effects of price on use in several cross-sectional surveys of high school seniors conducted in various years in the 1980s. This will shed light on the nature of the relationship between price and use for youth and how this relationship may have changed over time. A second primary aim is to examine the price effect in a panel of persons who were high school seniors at baseline and who have been interviewed at least twice since then. This part of the project will incorporate insights provided by a rational economic model of addictive behavior. This model emphasized the dependency of current consumption of an addictive good on past consumption and future consumption of that good. A failure to take account of these relationships may lead to an underestimation of the current price effect and to the long-run responsiveness of consumption to a permanent reduction in price. Subsidiary aims include investigations of whether alcohol and cigarettes are substitutes or complements for illegal drugs and whether various illegal drugs are substitutes or complements for each other. The data bases to be used are the 1980, 1985, and 1989 cross-sectional surveys of high school seniors conducted by the University of Michigan's Institute for Social Research as part of a national research program entitled """"""""Monitoring the Future"""""""" and the followup panel studies of the original high school seniors in the Michigan surveys that have been conducted annually since 1980. The relationship between money price and illegal drug use will be investigated using prices of cocaine, heroin, and marijuana for 100 cities collected quarterly since 1977 by the Drug Enforcement Administration (DEA) of the U.S. Department of Justice. These prices will be merged with the Michigan surveys based on the respondent's county of residence. Finally, state laws pertaining to penalties for the manufacture, sale, possession, and use of illegal drugs will be added to the micro data from a variety of published sources and from a special survey to be conducted by the Northern Illinois University Public Opinion Laboratory.
| Grossman, M; Chaloupka, F J (1998) The demand for cocaine by young adults: a rational addiction approach. J Health Econ 17:427-74 |
