Do prices count? A micro-econometric study of illicit drug consumption based on self-reported data

Anne Line Bretteville-Jensen and Erik Biorn

Empirical Economics, 2004, vol. 29, issue 3, 673-695

Abstract: Using a unique data set of almost 2,500 interviews with people attending a needle exchange service in Oslo, this paper sets out to estimate the impact of economic factors on heroin and amphetamine injectors’ drug consumption, including cross-price effects. To examine the robustness of the conclusions, four model versions are considered: with focus on (i) switching regression mechanisms treating dealing/non-dealing as an endogenous decision, (ii) spline function versions examining possible ‘kinks’ in the price response, (iii) a dynamic model version focusing on addiction, and (iv) pseudo panel data model versions focusing on unobserved heterogeneity. Negative and significant price elasticities and positive and significant income elasticities come out as robust results. Their magnitude vary, however, depending on the type of model, on the main drug for injecting, and on whether the consumer also is a dealer. Copyright Springer-Verlag 2004

Keywords: Heroin; amphetamine; price response; drug dealing; cross-price elasticity; C21; C22; C23; D12 (search for similar items in EconPapers)
Date: 2004
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DOI: 10.1007/s00181-004-0205-9

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