Demand for Illicit Drugs by Pregnant Women
We use survey data that have been linked to medical records data and city-level drug prices to estimate the demand for illicit drugs among pregnant women. The prevalence of prenatal drug use based on post partum interviews was much lower than that based on evidence in the mothers' and babies' medical records. We found that a $10 increase in the retail price of a gram of pure cocaine decreases illicit drug use by 12 to 15%. The estimated price effects for heroin are lower than for cocaine and are less robust across alternative model specifications. This study provides the first estimates of the effects of drug prices on prenatal drug use and yields important information about the potential of drug enforcement as a tool for improving birth outcomes.
Published: Lindgren, Bjorn and Michael Grossman (eds.) Advances in Health Economics, and Health Services Research 16, Economics of Substance Abuse. JAI Press, 2005.