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Even For Teenagers, Money Does Not Grow on Trees: Teenage Substance Use and Budget Constraints

Sara Markowitz () and John Tauras

No 12300, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper is about the spending choices of youth, with a particular focus on how the demand for cigarettes, alcohol and marijuana are influenced by changes in the prices of other products. Youth tend to have small incomes and limited wants, with the result that many students spend the bulk of their income on only a few items. Fast food, clothing and entertainment make up the majority of products purchased by teenagers. The hypothesis to be tested in this project is that changes in the prices of the other goods commonly bought by teenagers will affect budget allocations and thereby affect the demand for substances. We estimate own and cross price effects using the prices of cigarettes, alcohol, marijuana and other consumer products including gasoline, clothing, entertainment, and fast food. Income effects are also estimated and show that teens with higher incomes and allowances are more likely to use substances. The policy implications of the results are discussed.

JEL-codes: I0 D0 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hea and nep-mac
Date: 2006-06
Note: HE
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Published as Markowitz, S and Tauras, J "Even For Teenagers, Money Does Not Grow on Trees: Teenage Substance Use and Budget Constraints" Cited in London Financial Times, September 23, 2006.

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