The Effects of Cocaine and Heroin Prices on Drug-Related Emergency Department Visits

48 Pages Posted: 28 Jul 2004 Last revised: 9 Jul 2010

See all articles by Dhaval Dave

Dhaval Dave

Bentley University - Department of Economics; National Bureau of Economic Research (NBER) - NY Office

Date Written: July 2004

Abstract

This paper estimates the empirical relationship between the prices of cocaine and heroin and objective indicators of use. The set of outcomes is drug related hospital emergency department admissions where cocaine and heroin are cited, for 21 large U.S. metropolitan areas. These outcomes are superior to subjective self-reports, and are policy-relevant since they directly measure a large component of the health-care costs associated with heavy or chronic drug usage. Panel data methodology is used to identify the empirical link between drug prices and these indicators. Results indicate that health consequences associated with heavy or chronic drug use are negatively related to drug prices, an instrument of drug control policy. The elasticity of the probability of a cocaine mention with respect to own-price is estimated at -0.27, and the corresponding elasticity for the probability of a heroin mention is -0.15. The probability of any drug related episode, which captures polydrug usage, is also significantly negatively related to both cocaine and heroin prices. Cross-price effects are consistent with a complementary relationship between cocaine and heroin. Models indicate the presence of negative lagged price effects, confirming the strong addictive aspects of both drugs and the cumulative adverse effects of drug use on health.

Suggested Citation

Dave, Dhaval, The Effects of Cocaine and Heroin Prices on Drug-Related Emergency Department Visits (July 2004). NBER Working Paper No. w10619. Available at SSRN: https://ssrn.com/abstract=565171

Dhaval Dave (Contact Author)

Bentley University - Department of Economics ( email )

175 Forest Street
Waltham, MA 02452-4705
United States

National Bureau of Economic Research (NBER) - NY Office

365 Fifth Avenue, 5th Floor
New York, NY 10016-4309
United States

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