The demand for cocaine by young adults: a rational addiction approach

Abstract

This paper applies the rational addiction model to the demand for cocaine by young adults in the Monitoring the Future panel. The price of cocaine is added to this survey from the Drug Enforcement Administration's System to Retrieve Information from Drug Evidence. Results suggest that annual participation and frequency of use given participation are negatively related to the price of cocaine. In addition, current participation (frequency) is positively related to past and future participation (frequency). The long-run price elasticity of total consumption (participation multiplied by frequency given participation) of −1.35 is substantial.