Working Paper: NBER ID: w12300
Authors: Sara Markowitz; John Tauras
Abstract: This paper is about the spending choices of youth, with a particular focus on how the demand for cigarettes, alcohol and marijuana are influenced by changes in the prices of other products. Youth tend to have small incomes and limited wants, with the result that many students spend the bulk of their income on only a few items. Fast food, clothing and entertainment make up the majority of products purchased by teenagers. The hypothesis to be tested in this project is that changes in the prices of the other goods commonly bought by teenagers will affect budget allocations and thereby affect the demand for substances. We estimate own and cross price effects using the prices of cigarettes, alcohol, marijuana and other consumer products including gasoline, clothing, entertainment, and fast food. Income effects are also estimated and show that teens with higher incomes and allowances are more likely to use substances. The policy implications of the results are discussed.
Keywords: Teenage Substance Use; Budget Constraints; Cigarettes; Alcohol; Marijuana
JEL Codes: I0; D0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| higher prices of cigarettes (D49) | decrease in smoking participation among teenagers (I12) |
| higher gasoline prices (R48) | increase in smoking participation (I12) |
| price of beer (L66) | probability of smoking (C25) |
| increase in cigarette prices (D49) | decrease in marijuana use (I12) |