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by Frank Chaloupka Michael Grossman John A. Tauras National
Bureau of Economic Research, Inc. In recent years, the debate
over the costs and benefits of legalizing the use of currently illicit
drugs has been revived. This paper attempts to inform this debate by providing
some evidence on the effects of illicit drug prices and legal sanctions
for drug possession and sale on youth drug use. Data on cocaine and marijuana
use by high school seniors are taken from the 1982 and 1989 Monitoring
the Future surveys. Site-specific data on cocaine prices and legal sanctions
for the possession and sale, manufacture or distribution of cocaine and
marijuana are added to the survey data. The results indicate that youth
cocaine demand is sensitive to price, with average past year and past
month cocaine demand elasticities of -1.28 and -1.43, respectively. In
addition, the estimates suggest that increased sanctions for the possession
of cocaine and marijuana have a negative and statistically significant
impact on youth cocaine and marijuana use. However, the magnitude of these
estimates implies that very large increases in the monetary fines that
can be imposed for first offense possession would be necessary to achieve
meaningful reductions in use. Finally, sanctions for the sale, manufacture
or distribution of cocaine and marijuana were found to have little impact
on youth cocaine and marijuana use.
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