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

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  • Sara Markowitz
  • John Tauras

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.

Suggested Citation

  • Sara Markowitz & John Tauras, 2006. "Even For Teenagers, Money Does Not Grow on Trees: Teenage Substance Use and Budget Constraints," NBER Working Papers 12300, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:12300
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Vinish Shrestha, 2019. "Cigarette Prices and Driving Fatalities Among Youths," Working Papers 2019-02, Towson University, Department of Economics, revised Aug 2019.
    2. Sen, Bisakha, 2009. "The relationship between frequency of family dinner and adolescent problem behaviors after adjusting for other family characteristics," MPRA Paper 24329, University Library of Munich, Germany.
    3. Ana I. Balsa, 2008. "Parental Problem-drinking and Adult Children’s Labor Market Outcomes," Journal of Human Resources, University of Wisconsin Press, vol. 43(2), pages 454-486.
    4. Pudney, Stephen & Bryan, Mark & DelBono, Emilia, 2013. "Licensing and regulation of the cannabis market in England and Wales: Towards a cost-benefit analysis," MPRA Paper 50365, University Library of Munich, Germany.
    5. Shrestha, Vinish, 2019. "Cigarette prices and driving fatalities among youths," Economics Letters, Elsevier, vol. 184(C).
    6. Holford, Angus, 2020. "Youth employment, academic performance and labour market outcomes: Production functions and policy effects," Labour Economics, Elsevier, vol. 63(C).
    7. Lahav, Eyal & Benzion, Uri & Shavit, Tal, 2010. "Subjective time discount rates among teenagers and adults: Evidence from Israel," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(4), pages 458-465, August.

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    JEL classification:

    • I0 - Health, Education, and Welfare - - General
    • D0 - Microeconomics - - General

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