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State drug control and illicit drug participation ABSTRACT The purpose of this paper
is to estimate the effect of state criminal justice expenditures and state
public health expenditures on deterring illicit drug use. The empirical
model is based on a demand and supply model of drug markets. The effect
of a given expenditure on criminal justice or public health programs is
dependent on the magnitude of the resulting shifts in the two functions
and the demand price elasticity. A reduced form of the demand and supply
model is also estimated. The data employed come from the 1990 and 1991
National Household Surveys on Drug Abuse (NHSDA). Data on state and local
spending for drug related criminal justice and drug related public health
programs were merged with the NHSDA. The main findings from the regression
results are that drug control spending reduces drug use. However, the
results suggest for marijuana users, the marginal cost of drug control
exceeds the social benefits of drug control. This may not be the case
for users of other illicit drugs. Spending for drug enforcement by police
and drug treatment are found most effective in deterring drug use. However,
spending for correctional facilities is never significant which suggests
that a more efficient method of reducing drug use might be to reduce correctional
facilities spending and increase spending on treatment.
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