Externalities of Marijuana Legalization: Marijuana Use in Non-Legalizing States

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See all articles by Marit Hinnosaar

Marit Hinnosaar

University of Nottingham

Elaine Liu

University of Houston

Eva Loaeza-Albino

University of Houston

Date Written: September 13, 2023

Abstract

We study the impact of distant connections on marijuana use. Leveraging the Facebook Social Connectedness Index, which measures the strength of connectedness between geographic areas based on Facebook friendship ties, we explore the impact of connections to states where recreational marijuana use is legalized on marijuana use and workplace drug testing positivity rates in areas where marijuana remains illegal. The findings reveal that areas which are more connected to legalized states exhibit higher rates of marijuana use and workplace drug testing positivity even after controlling for geographic proximity to the legalized states. The results suggest that even connections beyond closed proximity can play a significant role in shaping individuals’ behaviors. Our findings of the externality of legalization in one state to other more connected out-of-state areas imply that studies that estimate the impact of legalization using a standard difference-in-differences approach without taking into account the network underestimate the direct effect on the state that legalizes.

Keywords: marijuana, externalities, Facebook

JEL Classification: I12, I18,

Suggested Citation

Hinnosaar, Marit and Liu, Elaine and Loaeza-Albino, Eva, Externalities of Marijuana Legalization: Marijuana Use in Non-Legalizing States (September 13, 2023). Available at SSRN: https://ssrn.com/abstract=

Marit Hinnosaar (Contact Author)

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom

Elaine Liu

University of Houston ( email )

4800 Calhoun Road
Houston, TX 77204
United States

Eva Loaeza-Albino

University of Houston ( email )

4104 Martin Luther King Blvd
Houston, TX 77204
United States

HOME PAGE: http://evaloaeza.com/

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