NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Demographic Groups Differ in Response to Substance Abuse Policies

"A 10 percent increase in the price of cigarettes shrinks the number of young white men smoking by 8.6 percent, almost twice the effect for young women."



If you raise the "price" of tobacco, alcohol, or illicit drugs, their consumption will drop; but this responsiveness to price varies somewhat across gender, race, and other demographic categories. For a number of years, government at the federal, state, and local levels and various private groups have campaigned or taken other measures, such as raising taxes on these products, to discourage their consumption. Drinking to excess, smoking, and drug addiction impose significant costs on society as well as on the individual users, including the cost of health problems, lost work, crime, and accidents, especially on the highway and at work.

These policies have produced some results. But, according to NBER Research Associates Henry Saffer and Frank Chaloupka, "One shortcoming of these campaigns has been the lack of emphasis on potential demographic differences in response to public policies. If one or more demographic groups are relatively unresponsive to price, then alternative policies might be appropriate. Estimation of the effect of price, by demographic group, would be helpful in designing the mix of strategies that will be most successful in reducing overall alcohol and drug abuse."

"There is clearly not a 'one-size fits all' strategy for discouraging youth smoking," NBER Research Associate Frank Chaloupka and co-author Rosalie Liccardo Pacula write in An Examination of Gender and Race Differences in Youth Smoking Responsiveness to Price and Tobacco Control Policies(NBER Working Paper No. 6541). In a related paper, Demographic Differentials in The Demand for Alcohol and Illicit Drugs (NBER Working Paper No. 6432), Saffer and Chaloupka look at differences in, and the impact of price changes on, the use of alcohol and illicit drugs for eight demographic groups. Their full sample includes more than 49,000 individuals from the National Household Survey of Drug Abuse: white-male-non-Hispanics, blacks, native Americans, Asians, Hispanics, women, and youth.

The Saffer-Chaloupka paper finds that blacks, native Americans, Asians, Hispanics, women, and youth are less likely to drink alcohol than white-male-non-Hispanics. Women and married people on average consume less alcohol than the other groups. An increase in income stimulates consumption of alcohol across all demographic groups except blacks, the authors find.

In the case of marijuana, native Americans, Asians, Hispanics, and women are less likely to use the drug. Adolescents are the biggest users. If a state decriminalizes the use of a small amount of marijuana, consumption increases (except for native Americans). Youths and Hispanics with higher incomes are more likely to smoke marijuana, but white males and blacks are less likely to do so when they are more prosperous.

As for cocaine, Asians, women, and married people use less of the drug than other groups. A higher price of cocaine shrinks consumption for all but blacks and Asians, the authors find. Blacks, native Americans, Hispanics, and youth are more likely to use heroin, and women and married people less likely than other groups. Another interesting finding of this study is that policies which hike alcohol prices also reduce drug abuse. Similarly, policies which increase drug prices shrink alcohol use.

In the Chaloupka-Pacula paper, the authors find that youths do respond to changes in price and other public policies designed to discourage tobacco usage, but differently for different groups. Using the 1992-4 Monitoring the Future surveys conducted by the Institute of Social Research at the University of Michigan of some 110,000 eighth, tenth, and 12th grade students, the authors find that young men are much more responsive to changes in the price of cigarettes than young women. A 10 percent increase in the price of cigarettes shrinks the number of young white men smoking by 8.6 percent, almost twice the effect for young women. That same price increase decreases the prevalence of smoking among young black men by 16.5 percent. But price does not affect the probability of smoking for young black women.

State anti-tobacco activities decrease smoking by white youths, but have no significant effect on young blacks, particularly black males. On the other hand, smoker protection laws, enacted by states generally believed to be less aggressive in their efforts to discourage smoking, mean more smoking by young blacks, but not by white youths.

Clean indoor air laws -- the restrictions on smoking in offices, restaurants, and so on -- decrease smoking prevalence among young white males, but apparently not among other adolescents. Strict laws on youth access to cigarettes trim smoking rates among young blacks, but have no significant effect on smoking prevalence among white youth.

The authors note that between 1981 and 1990, the real price of cigarettes climbed 63 percent. Their model would have predicted a large drop in smoking rates for youths. In fact, smoking did decline 48.5 percent among black youths and 7.6 percent among young women. But it increased 5.9 percent for young whites and 9.8 percent for young males. From 1991 to 1996, smoking rates among young men were higher than those for young women.

This, the authors conclude, is not so surprising considering that the tobacco industry nearly tripled its advertising and promotional expenditures at the same time that prices were rising. The increase in expenditures may have offset the jump in prices. "To the extent that advertising and promotional activities target specific youths more than others," Chaloupka and Pacula write, "this increase in expenditure is likely to influence youth smoking rates differently as well."

-- David R. Francis


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