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Drug Injection, Drug Dealing, And The Influence Of Economic Factors: A Two-Drug Micro-Econometric Analysis

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Abstract

An important question for policy makers is how drug users may respond to changes in economic factors. Based on a unique data set of almost 2,500 interviews with people attending a needle exchange service in Oslo, this paper aims at estimating the impact of economic factors on heroin and amphetamine injectors' drug consumption. Four econometric models versions are considered. The results include, in addition to estimates of price and income elasticities within switching regression models treating dealing/non-dealing as an endogenous decision, estimates of cross-price elasticities of the two drugs, and an examination of possible `kinks' in the demand curve of heroin. One dynamic model version speci cally aims at examining the issue of addiction. Lastly, we examine, by means of pseudo panel data models, the possible influence of various kinds of unobserved heterogeneity on estimated price and income responses. In many of the models, we obtain negative and signi cant price elasticities and positive and signi cant income elasticities, although the size of the estimates vary, depending on the model applied, on the main drug for injecting, and on whether the consumer also is a dealer.

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  • Bretteville-Jensen, Anne-Line & Biørn, Erik, 2002. "Drug Injection, Drug Dealing, And The Influence Of Economic Factors: A Two-Drug Micro-Econometric Analysis," Working Papers in Economics 11/02, University of Bergen, Department of Economics.
    • Handle: RePEc:hhs:bergec:2002_011
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    1. Anne Line Bretteville‐Jensen, 1999. "Gender, heroin consumption and economic behaviour," Health Economics, John Wiley & Sons, Ltd., vol. 8(5), pages 379-389, August.
    2. Bretteville-Jensen,A.L. & Biorn,E., 2001. "Estimating addicts' price response of heroin : a panel data approach based on a re-interviewed sample," Memorandum 08/2001, Oslo University, Department of Economics.
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    More about this item

    Keywords

    heroin; amphetamine; price response; drug dealing; cross-price elasticity.;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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