Individual Behaviours and Substance Use: The Role of Price

Michael Grossman

A chapter in Substance Use: Individual Behaviour, Social Interactions, Markets and Politics, 2005, pp 15-39 from Emerald Group Publishing Limited

Abstract: I discuss economic approaches to the demand for harmfully addictive substances with an emphasis on the role of money prices. First, I examine trends in the real prices and in the prevalence of the use of cigarettes, alcohol, cocaine, heroin, and marijuana in the U.S.A. Then I present estimates of time-series demand functions. Next, I discuss how economists have modified their traditional model of consumer behaviour to incorporate the addictive aspects of illegal substances. I conclude with implications for tax policy and for the lively and contentious debate concerning the legalization of marijuana, cocaine, and heroin.

Date: 2005
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Working Paper: Individual Behaviors and Substance Use: The Role of Price (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:eme:aheszz:s0731-2199(05)16002-6

DOI: 10.1016/S0731-2199(05)16002-6

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