ESTIMATING THE PRICE ELASTICITIES OF DEMAND FOR ILLICIT DRUGS
Todd A Olmstead
George Mason University, 4400 University Drive, Ms4c6, Fairfax, Va 22030
Grant 1R21DA025859-01 from National Institute On Drug Abuse
Abstract: When evaluating the effectiveness of alternative policies aimed at reducing the cost of illicit drug use, two pieces of information are required (1) the impact of the policies on drug prices faced by users, and (2) the change in users´ demand for drugs associated with a given change in drug prices (i.e., the price elasticity of demand). However, few studies report estimates of the price elasticities of demand for illicit drugs. Moreover, although the scientific literature presumes that demand elasticities depend on other factors, including treatment status, little evidence exists to support these presumptions. The planned research will combine novel ambulatory data collection methods with a within-subjects design to estimate demand elasticities in both real-world and laboratory settings. Two groups of heroin users (N = 60 in each group), varying by treatment status, will report on their daily drug purchases during two waves of data collection using cell phones. Each wave will last two weeks, and consecutive waves will be separated by six months. An interactive voice response system will call subjects daily during each wave to collect information on (1) the types of drugs purchased for personal consumption, (2) the amounts purchased, (3) the expected purity/quality of the drugs, and (4) prices paid for each purchase since the last call. Real-world demand elasticities for heroin, cocaine, valium, alcohol and marijuana will be estimated separately for each subject group, thereby filling an important gap in the literature and informing future policy decisions. In addition, the subjects will participate in two laboratory experiments-one during each wave-in which they will make hypothetical drug purchases at varying drug prices. Demand elasticities from the laboratory experiments will be estimated and compared to their real-world counterparts, thereby testing the external validity of the laboratory method. If valid, this method can be used to estimate demand elasticities at much smaller expense than is typically incurred in real-world settings. The purpose of this research is to determine how illicit drug users change their drug consumption patterns in response to changes in illicit drug prices and personal income. These behavioral changes will be quantified using elasticities of demand (cross-price, own-price, and income). This knowledge may ultimately help policymakers evaluate and improve policy interventions aimed at reducing the societal cost of illicit drug use in the US. For example, if treatment does substantially impact the demand for illicit drugs, this information may pave the way for further expansion of drug abuse treatment services. This application aims to provide new estimates from laboratory based and real-world based settings of the price elasticity of demand for illicit drugs using a novel sample of heroin and polydrug users, some of whom are currently in methadone treatment
Keywords: 3-Hepta, 6-(dimethylamino)-4, 4-diphenyl-; 7-Chloro-1, 3-dihydro-1-methyl-5-phenyl-2H-1, 4-benzodiazepin-2-one; 8-Azabicyclo(3.2.1)octane-2-carboxylic acid, 3-(benzoyloxy)-8-methyl-, methyl ester, (1R-(exo, exo))-; Adanon; Adopted; Affect; Alcohols; Althose; Behavioral; Care, Health; Cell Phone; Cellular Phone; Chemical Class, Alcohol; Cocaine; Consumption; Coupled; Crime; Data; Data Collection; Diacetylmorphine; Diamorphine; Diazepam; Dolophine; Drug Abuse Treatment Services; Drug Costs; Drug abuser; Drug usage; Drug user; Drugs; Drugs, Illicit; Economic Income; Economical Income; Effectiveness; Elasticity; Future; Goals; Hand; Healthcare; Heroin; Heroin Users; Illicit Drugs; Imprisonment; Income; Intervention; Intervention Strategies; Knowledge; Laboratories; Laboratory Study; Lead; Literature; Marihuana; Medication; Methadone; Methadose; Methods; Misuses drugs; Morphinan-3, 6-diol, 7, 8-didehydro-4, 5-epoxy-17-methyl- (5alpha, 6alpha)-, diacetate (ester); Narcotic Antagonists; Opiate Antagonist; Opioid Antagonists; Pattern; Pb element; Pharmaceutic Preparations; Pharmaceutical Preparations; Policies; Price; Problem drug user; Public Health; Reporting; Research; SUBGP; Sales; Sampling; Services; Study Subject; Subgroup; System; System, LOINC Axis 4; Telephone, Cellular; Testing; United States; Users, Heroin; Validity of Results; Valium; Voice; base; cost; design; designing; drug quality; drug use; drug/agent; economic cost; effective therapy; experiment; experimental research; experimental study; heavy metal Pb; heavy metal lead; improved; incarceration; interventional strategy; methadone maintenance; novel; opioid withdrawal; population survey; prevent; preventing; pricing; productivity loss; public health medicine (field); public health relevance; research study; response; social
Relevance: Relevance to Public Health: The purpose of this research is to determine how illicit drug users change their drug consumption patterns in response to changes in illicit drug prices and personal income. These behavioral changes will be quantified using elasticities of demand (cross-price, own-price, and income). This knowledge may ultimately help policymakers evaluate and improve policy interventions aimed at reducing the societal cost of illicit drug use in the US. For example, if treatment does substantially impact the demand for illicit drugs, this information may pave the way for further expansion of drug abuse treatment services
Project start date: 2009-09-01
Project end date: 2011-08-31
Budget start date: 1-SEP-2009
Budget end date: 31-AUG-2010
PFA/PA: PA-06-181
1R21DA025859-01 (2009): $224823
Sponsored Links Excellgen http://Excellgen.com
Grants awarded to Todd A Olmstead
ESTIMATING THE PRICE ELASTICITIES OF DEMAND FOR ILLICIT DRUGS
Todd A Olmstead
George Mason University, 4400 University Drive, Ms4c6, Fairfax, Va 22030
Grant 5R21DA025859-02 from National Institute On Drug Abuse
Abstract: When evaluating the effectiveness of alternative policies aimed at reducing the cost of illicit drug use, two pieces of information are required (1) the impact of the policies on drug prices faced by users, and (2) the change in users´ demand for drugs associated with a given change in drug prices (i.e., the price elasticity of demand). However, few studies report estimates of the price elasticities of demand for illicit drugs. Moreover, although the scientific literature presumes that demand elasticities depend on other factors, including treatment status, little evidence exists to support these presumptions. The planned research will combine novel ambulatory data collection methods with a within-subjects design to estimate demand elasticities in both real-world and laboratory settings. Two groups of heroin users (N = 60 in each group), varying by treatment status, will report on their daily drug purchases during two waves of data collection using cell phones. Each wave will last two weeks, and consecutive waves will be separated by six months. An interactive voice response system will call subjects daily during each wave to collect information on (1) the types of drugs purchased for personal consumption, (2) the amounts purchased, (3) the expected purity/quality of the drugs, and (4) prices paid for each purchase since the last call. Real-world demand elasticities for heroin, cocaine, valium, alcohol and marijuana will be estimated separately for each subject group, thereby filling an important gap in the literature and informing future policy decisions. In addition, the subjects will participate in two laboratory experiments-one during each wave-in which they will make hypothetical drug purchases at varying drug prices. Demand elasticities from the laboratory experiments will be estimated and compared to their real-world counterparts, thereby testing the external validity of the laboratory method. If valid, this method can be used to estimate demand elasticities at much smaller expense than is typically incurred in real-world settings. The purpose of this research is to determine how illicit drug users change their drug consumption patterns in response to changes in illicit drug prices and personal income. These behavioral changes will be quantified using elasticities of demand (cross-price, own-price, and income). This knowledge may ultimately help policymakers evaluate and improve policy interventions aimed at reducing the societal cost of illicit drug use in the US. For example, if treatment does substantially impact the demand for illicit drugs, this information may pave the way for further expansion of drug abuse treatment services. This application aims to provide new estimates from laboratory based and real-world based settings of the price elasticity of demand for illicit drugs using a novel sample of heroin and polydrug users, some of whom are currently in methadone treatment
Keywords: 3-Hepta, 6-(dimethylamino)-4, 4-diphenyl-; 7-Chloro-1, 3-dihydro-1-methyl-5-phenyl-2H-1, 4-benzodiazepin-2-one; 8-Azabicyclo(3.2.1)octane-2-carboxylic acid, 3-(benzoyloxy)-8-methyl-, methyl ester, (1R-(exo, exo))-; Adanon; Adopted; Affect; Alcohols; Althose; Behavioral; Care, Health; Cell Phone; Cellular Phone; Chemical Class, Alcohol; Cocaine; Consumption; Coupled; Crime; Data; Data Collection; Diacetylmorphine; Diamorphine; Diazepam; Dolophine; Drug Abuse Treatment Services; Drug Costs; Drug abuser; Drug usage; Drug user; Drugs; Drugs, Illicit; Economic Income; Economical Income; Effectiveness; Elasticity; Future; Goals; Hand; Healthcare; Heroin; Heroin Users; Illicit Drugs; Imprisonment; Income; Intervention; Intervention Strategies; Knowledge; Laboratories; Laboratory Study; Lead; Literature; Marihuana; Medication; Methadone; Methadose; Methods; Misuses drugs; Morphinan-3, 6-diol, 7, 8-didehydro-4, 5-epoxy-17-methyl- (5alpha, 6alpha)-, diacetate (ester); Narcotic Antagonists; Opiate Antagonist; Opioid Antagonists; Pattern; Pb element; Pharmaceutic Preparations; Pharmaceutical Preparations; Policies; Price; Problem drug user; Public Health; Reporting; Research; SUBGP; Sales; Sampling; Services; Study Subject; Subgroup; System; System, LOINC Axis 4; Telephone, Cellular; Testing; United States; Validity of Results; Valium; Voice; base; cost; design; designing; drug quality; drug use; drug/agent; economic cost; effective therapy; experiment; experimental research; experimental study; heavy metal Pb; heavy metal lead; improved; incarceration; interventional strategy; methadone maintenance; novel; opioid withdrawal; population survey; prevent; preventing; pricing; productivity loss; public health medicine (field); public health relevance; research study; response; social
Relevance: Relevance to Public Health: The purpose of this research is to determine how illicit drug users change their drug consumption patterns in response to changes in illicit drug prices and personal income. These behavioral changes will be quantified using elasticities of demand (cross-price, own-price, and income). This knowledge may ultimately help policymakers evaluate and improve policy interventions aimed at reducing the societal cost of illicit drug use in the US. For example, if treatment does substantially impact the demand for illicit drugs, this information may pave the way for further expansion of drug abuse treatment services
Project start date: 2009-09-01
Project end date: 2011-08-31
Budget start date: 1-SEP-2010
Budget end date: 31-AUG-2011
PFA/PA: PA-06-181
5R21DA025859-02 (2010): $181594