title: The price elasticity of demand for heroin: Matched longitudinal and experimental evidence.
abstract: This paper reports estimates of the price elasticity of demand for heroin based on a newly constructed dataset. The dataset has two matched components concerning the same sample of regular heroin users: longitudinal information about real-world heroin demand (actual price and actual quantity at daily intervals for each heroin user in the sample) and experimental information about laboratory heroin demand (elicited by presenting the same heroin users with scenarios in a laboratory setting). Two empirical strategies are used to estimate the price elasticity of demand for heroin. The first strategy exploits the idiosyncratic variation in the price experienced by a heroin user over time that occurs in markets for illegal drugs. The second strategy exploits the experimentally induced variation in price experienced by a heroin user across experimental scenarios. Both empirical strategies result in the estimate that the conditional price elasticity of demand for heroin is approximately -0.80.
authors.affiliation: Lyndon B. Johnson School of Public Affairs, The University of Texas at Austin, 2300 Red River Street, Austin, TX 78713, United States; Seton/UT Southwestern Clinical Research Institute of Austin, 1400 North IH 35, Austin, TX 78701, United States. Electronic address: tolmstead@austin.utexas.edu.
authors.forename: Todd A
authors.initials: TA
authors.lastname: Olmstead
authors.affiliation: University of Connecticut Health Center, 263 Farmington Avenue, Farmington, CT 06030, United States. Electronic address: salessi@uchc.edu.
authors.forename: Sheila M
authors.initials: SM
authors.lastname: Alessi
authors.affiliation: Department of Economics, The University of Texas at Austin, 2225 Speedway, Austin, TX 78712, United States. Electronic address: brendan.kline@austin.utexas.edu.
authors.forename: Brendan
authors.initials: B
authors.lastname: Kline
authors.affiliation: RAND, 1776 Main Street, Santa Monica, CA 90407, United States. Electronic address: pacula@rand.org.
authors.forename: Rosalie Liccardo
authors.initials: RL
authors.lastname: Pacula
authors.affiliation: University of Connecticut Health Center, 263 Farmington Avenue, Farmington, CT 06030, United States. Electronic address: npetry@uchc.edu.
authors.forename: Nancy M
authors.initials: NM
authors.lastname: Petry
mesh_terms: D000328:Adult; D003132:Commerce; D005260:Female; D003932:Heroin / Q000191:economics* / Q000600:supply & distribution; D006556:Heroin Dependence / Q000191:economics*; D006801:Humans; D008137:Longitudinal Studies; D008297:Male; D008875:Middle Aged; D014481:United States
chemical_list: D003932:Heroin
keywords: Demand; Elasticity; Experimental methods; Heroin; Panel data