The Effects of Prices and Policies on the Demand for Marijuana: Evidence from the National Household Surveys on Drug Abuse

22 Pages Posted: 18 Feb 1999 Last revised: 26 Dec 2001

See all articles by Matthew C. Farrelly

Matthew C. Farrelly

RTI International

Jeremy W. Bray

Research Triangle Institute

Gary A. Zarkin

Research Triangle Institute - Center for Economics Research (CER)

Brett W. Wendling

Research Triangle Institute - Center for Economics Research (CER)

Rosalie Liccardo Pacula

University of Southern California - Schaeffer Center for Health Policy and Economics; National Bureau of Economic Research (NBER)

Date Written: February 1999

Abstract

Recent studies have shown that efforts to curb alcohol use by increasing the price of alcohol and limiting youth's access have succeeded, but they may have had the unintended consequencce of increasing marijuana use. This possibility is troubling in light of a recent government report that shows that marijuana use among teens more than doubled between 1990 and 1997. What impact will the proposed large increase in cigarette prices have on the demand for other substances such as marijuana? To better understand how the demand for marijuana responds to changes in the policies and prices that affect its use, we explore the National Household Survy on Drug Abuse (NHSDA). Overall, we find that marijuana, alcohol, and tobacco are complements, sot that increasing the price of any one will decrease the demand for marijuana. The results of this paper will help guide the creation of comprehensive policies that curb the use of marijuana in two ways: first, they quantify the effects of policies aimed at curbing the use of each substance, allowing policymakers to evaluate alternative policy options; and second, they clarify the dynamics and interactions between alcohol, tobacco, and marijuana use in response to government policies.

Suggested Citation

Farrelly, Matthew C. and Bray, Jeremy W. and Zarkin, Gary A. and Wendling, Brett W. and Pacula, Rosalie Liccardo, The Effects of Prices and Policies on the Demand for Marijuana: Evidence from the National Household Surveys on Drug Abuse (February 1999). NBER Working Paper No. w6940. Available at SSRN: https://ssrn.com/abstract=149714

Matthew C. Farrelly (Contact Author)

RTI International ( email )

PO Box 12194
Health, Social and Economics Research 3040 Cornwallis Rd.
Research Triangle Park, NC 27709-2194
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Jeremy W. Bray

Research Triangle Institute ( email )

PO Box 12194
3040 Cornwallis Rd
Research Triangle Park, NC 27709-2194
United States

Gary A. Zarkin

Research Triangle Institute - Center for Economics Research (CER) ( email )

3040 Cornwallis Road
Research Triangle Park, NC 27709-2194
United States

Brett W. Wendling

Research Triangle Institute - Center for Economics Research (CER) ( email )

3040 Cornwallis Road
Research Triangle Park, NC 27709-2194
United States

Rosalie Liccardo Pacula

University of Southern California - Schaeffer Center for Health Policy and Economics ( email )

635 Downey Way
Los Angeles, CA 90089-3333
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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