The Economic Analysis of Substance Abuse

NBER Reporter, Summer 1997 | Go to article overview

The Economic Analysis of Substance Abuse


The NBER recently sponsored a project on substance use and abuse, directed by Research Associates Frank J. Chaloupka, University of Illinois, Chicago; Michael Grossman, CUNY; and Henry Saffer, Kean College; and Warren K. Bickel, University of Vermont. The culmination of this project was a conference, held in Cambridge on March 27-8, which integrated the econometric and behavioral research produced by the economists and behavioral psychologists involved. The program for the two-day meeting was:

Donald S. Kenkel, Cornell University, and Ping Wang, Pennsylvania State University, "Are Alcoholics in Bad Jobs?"

Kenneth Silverman and Elias Robles, Johns Hopkins University, "Employment as a Drug Abuse Treatment Intervention: A Behavioral Economic Analysis"

Discussants: Sharon Hall, University of California, San Francisco, and John Mullahy, NBER and University of Wisconsin, Madison

Robert Kaestner, NBER and Baruch College, "Does Drug Use Cause Poverty?"

Marilyn Carroll, University of Minnesota, "Income Alters the RElative Reinforcing Effects of Drug and Nondrug Reinforces"

Discussants: Steven Hursh, Science Applications International, and Christopher Ruhm, Council of Economic Advisers

Robert L. Ohsfeldt and Eli I. Capilouto, University of Alabama, Birmingham, and Raymond G. Boyle, Health Partners Group Health Foundation, "Tobacco Taxes, Smoking Restrictions, and Tobacco Use"

Warren K. Bickel and Gregory J. Madden, University of Vermont, "The Behavioral Economics of Smoking"

Discussants: Kenneth E. Warner, University of Michigan, and Neil Grunberg, Uniformed Services University

Solomon W. Polachek and Norman Spear, SUNY-Binghamton, and Jerry Sarbaum, Whitman College, "The Effects of Price Changes on the Consumption of Alcohol in Alcohol-Experienced Rats"

Rudy E. Vuchinich and Cathy A. Simpson, Auburn University, "Delayed Reward Discounting in Alcohol Abuse"

Discussants: Michael Hilton, National Institute on Alcohol Abuse and Alcoholism, and Thomas Babor, University of Connecticut

Frank J. Chaloupka, Michael Grossman; and John A. Tauras, University of Illinois, Chicago, "The Demand for Cocaine and Marijuana by Youth"

Stephen T. Higgins, University of Vermont, "Some Potential Contributions of Reinforcement and Consumer Demand Theory to Reducing Cocaine Use"

Discussants: Charles R. Schuster, Wayne State University, and Jonathan Caulkins, Carnegie-Mellon University

Henry Saffer and Frank J. Chaloupka, "Demographic Differentials in the demand for Alcohol and Illicit Drugs"

Nancy M. Petry, University of Connecticut, and Warren K. Bickel, "A Behavioral Economic Analysis of Polydrug Abuse in Heroin Addicts"

Discussants: Mark Kleiman, University of California, Los Angeles, and A. Thomas McLellan, University of Pennsylvania

Kenkel and Wang show that, if they are employed, make alcoholics are less likely than nonalcoholic men to receive a variety of fringe benefits, and are more likely to be injured on the job, and to work for smaller firms. The value of the lost fringe benefits is about $450 per alcoholic. Alcoholics are also more likely to be in blue-collar occupations, in which they earn an estimated 15 percent less than their nonalcoholic peers.

Silverman and Robles seek to identify an effective employment-based treatment intervention for chronically unemployed methadone patients. They find that the utility of employment as a drug abuse treatment intervention depends, in large part, on the extent to which it is used to arrange substantial monetary reinforcement for abstinence from drugs, and on the opportunity cost of drug use (that is, the cost in lost wages or jobs of continuing to use drugs). They conclude that employment could serve a valuable role in the treatment of hard-core drug abuse. They confirm, as has been shown in controlled clinical trials, that it is among the more effective drug abuse treatments currently in use.

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