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NCJ Number: 156258 Find in a Library
Title: Economics of Drugs: Rational Addiction and the Effect of Price on Consumption
Journal: American Economic Review  Volume:81  Issue:2  Dated:(May 1991)  Pages:237- 241
Author(s): G S Becker; M Grossman; K M Murphy
Date Published: 1991
Page Count: 5
Type: Survey
Format: Article
Language: English
Country: United States of America
Annotation: This economic analysis of the effects of drug legalization on drug use concludes that the permanent reduction in price caused by legalization is likely to produce a substantial increase in drug use, particularly among low-income people and youth.
Abstract: The analysis combines empirical data with the Becker- Murphy theoretical model of rational addiction, which implies that addictive substances are likely to be quite responsive to price. The analysis emphasizes the concepts of reinforcement and tolerance. Reinforcement means that greater past consumption of addictive substances such as drugs or cigarettes increases the desire for current consumption, while tolerance cautions that the utility from a given amount of consumption is lower when past consumption is greater. The analysis notes that money price tends to be relatively more important to poorer and younger consumers, partly because they generally place a smaller monetary value on health and other harmful future effects. Poorer and younger persons also appear to discount the future more heavily than others. Data from smoking, heavy drinking, and gambling strongly supports this model of rational addition. Although a drug education program would attempt to counter the effects of a fall in drug prices, it is unlikely to be as effective with the poor and the young than among other segments of the population. Figure, footnotes, and 10 references
Main Term(s): Drug legalization
Index Term(s): Drug abuse causes; Drug Policy; Economic models
Note: DCC
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