addiction compulsion and the technology of consumption the consumption technology model of lancaster and becker is extended to include addictive activities assuming a utility function in which the individual places a premium on maintenance of self esteem the model generates empirically verified patterns of habituation withdrawal and the compulsive restarting of an abandoned habit it is then applied to the analysis of public policies toward drug abuse their frequent ineffectiveness is shown to result from an unwarranted emphasis on deterring the addictive activity rather than on encouraging atceptable behavior

technology adoption under production uncertainty theory and application to irrigation technology we propose a theoretical framework to analyze the conditions under which a farmer facing production uncertainty due to a possible water shortage and incomplete information will adopt a more efficient irrigation technology a reduced form of this model is empirically estimated using a sample of 265 farms located in crete greece the empirical results suggest that farmers choose to adopt the new technology in order to hedge against production risk in addition we show that the farmer s human capital also plays a significant role in the decision to adopt modern more efficient irrigation equipment

effluent regulation and long run optimality a regulator faced with free entry of firms is concerned not only with the implications of public policy for the discharges from a representative firm but also with the total pollution observed at the long run market equilibrium the regulator must take into account not only the effects of regulations upon the net marginal returns of the firm but must also consider the total profit of the firm and incentives for entry and exit this paper shows that effluent charges and tradeable effluent permits lead to long run optimality with entry of small firms the difference between firm payments and environmental damages is interpreted as the rent accruing to the environmental resource this result applies only to the competitive case with small polluters the analysis presented here allows a comparison and clarification of the literature on small and large polluters in a multi input framework with social damages dependent upon total effluents effluent charges are shown here to result in socially optimal entry confirming an assertion of baumol and oates 2 p 179 fn 161 and the important result of schulze and d arge 15 by taking average as well as marginal damages into account the effluent charge results in optimal firm scale levels and the correct input mix at the free entry market equilibrium the firm subject to an effluent tax will operate above or below the private minimum efficient scale depending upon whether average external costs exceed or are less than marginal external costs since public policy to reduce effluents is often directed at reducing the effluentgenerating activity some policy recommendations include a tax on the final output of the polluting firm in some theoretical analyses a relation between the output of the firm and the effluent level is identified and a pigouvian output tax is applied this approach should not be followed by policymakers since an output tax does not provide firms with the correct incentives for either input substitution or market entry it is shown that while a lump sum transfer is needed to provide correct entry incentives when a pigouvian output tax is applied no such transfer is needed if the tax is correctly applied to effluents contrary to 5 even if optimal firm scale and i thank the referees for helpful suggestions the support of the national science foundation under grant ses 82 19121 is gratefully acknowledged any errors are my responsibility 103

what s legal and what s not the regulation of opiates in 1912 this paper develops a model to explain state level opiate regulation in 1912 the personal choice of whether to engage in mainstream or deviant activity is determined by consumption technology and market prices and voting determines the legality of deviant behavior voting outcomes depend on population characteristics including diversity tolerance visiblilty of deviance and the distribution of consumption efficiencies a logit equation whose dependent variable is the presence of a state opiate prescription law is estimated results broadly support the collective choice model and disconfirm the role of interest groups particularly physicians in determining prescription regulation i introduction alcohol and nicotine may be the most dangerous drugs sold today considering their effects on health and accidents legal restrictions on the sale and private use of tobacco and alcohol are minor some currently illegal substances including marijuana and opiates might in fact be less harmful than alcohol and tobacco ff used in moderation why are some commodities legal and others not economists should be interested in the question for two reasons the first is that the work of non economists often uses economic metaphors a number of historians have described the prohibition of alcohol and opiates in america in terms of interest group politics 1 economists however have yet to explain these episodes using their own models of regulation and collective choice the second reason is that the historical facts are dramatic enough to tax the explanatory power of economics between 1890 and 1920 private transactions in alcohol and opiates went from being virtually unregulated by the federal government to complete illegality 2 this change in legal status was not a response to new scientific knowledge about the substances becker s model of household production 1981 chs 1 and 2 formalizes the questions at issue lannaccone 1988 has recently used becker s model to analyze the sociological distinction between mainstream churches and religious sects assuming individuals have differing consumption technologies he derives propositions about the characteristics of religious sects and their members iannaccone 1988 242 45 notes that churches are characterized by inclusivity and sects by exclusivity church members have more heterogeneous beliefs socialize mainly with people from outside their church and place few demands on their church for non religious support services churches are more tolerant of diverse behavior and place fewer restrictions on the conduct of members church members span a wider range of demographics than do sect members they are on average economically better off than sect members but sect members contribute more funds to their institutions the distinction between churches and sects is analogous to that between licit and illicit drug use drug users are demographically more homogeneous than nonusers more poorly socialized and more likely to spend a major portion of their time in drug related activity 3 they have lower productivity than alcohol or tobacco users both at work and in household consumption 4 and are more likely to restrict themselves to companions with similar consumption patterns kandel and maloff 1983 suggest that learning to use drugs in the subculture resembles an initiation into the rites and beliefs of a deviant sect according to winick 1974 the exit from drug taking like that from a sect is often a total burnout to zero use which occurs at a predictable time the church sect model yields such predictions about drug use and generalizes individualistic models of that activity 5 in the next section i model an individual who receives utility from consumption itself and from the attitude or state of mind in which consumption takes place consumption and attitude are the outputs of household production functions after deriving the optimum in a two activity model i analyze the choice between mainstream and deviant attitudinal activities

what price drug use the contribution of economics to an evidence based drugs policy abstract this paper presents a review of the recent economics literature in the area of illicit drug use particular attention is paid to the economics of addiction and the rational addiction model the welfare economics framework for analysing the social costs of drug use and the attempts that have been made by economists to evaluate recent or proposed policy interventions a dominant theme in this review is the problem of poor data availability this is particularly true when it comes to implementing the rational addiction model but it is also apparent in the literature on estimating the costs of illicit drug use to society as a whole one of the main conclusions of this review is that until recently public policy has not been particularly influenced by research carried out by economists it is not clear whether this is because economists have had to grapple with inadequate data and hence their conclusions are couched in uncertainty or whether it is because drugs researchers have assumed a very limited role for economists in their analysis

a cross national comparison of consumer research measures the impact of three factors that affect the psychometric rigor of cross national consumer research comparisons is measured in this study conclusions are also drawn about the interactions among these factors and the resultant deterioration in the psychometric quality of the data

the determinants of occupational success in britain this paper is concerned with measuring the true impact of certain human capital variables on an individual s occupational position the particular variables which are analysed are training qualifications and spells of sickness and unemployment the longitudinal nature of the data enables us to control for all relevant individual attributes which remain fixed over the period of the sample this is vitally important because these attributes are strongly correlated with the variables of interest and would seriously corrupt estimates derived from a single cross section a method of generating consistent estimates as n oo t fixed for a dynamic model with fixed effects is also illustrated

two stage residual inclusion estimation addressing endogeneity in health econometric modeling the paper focuses on two estimation methods that have been widely used to address endogeneity in empirical research in health economics and health services research two stage predictor substitution 2sps and two stage residual inclusion 2sri 2sps is the rote extension to nonlinear models of the popular linear two stage least squares estimator the 2sri estimator is similar except that in the second stage regression the endogenous variables are not replaced by first stage predictors instead first stage residuals are included as additional regressors in a generic parametric framework we show that 2sri is consistent and 2sps is not results from a simulation study and an illustrative example also recommend against 2sps and favor 2sri our findings are important given that there are many prominent examples of the application of inconsistent 2sps in the recent literature this study can be used as a guide by future researchers in health economics who are confronted with endogeneity in their empirical work

drugs policy what should we do about cannabis public policy has failed to prevent large scale consumption of cannabis in most developed countries so what if anything should we do to change the policy environment cannabis consumption is unambiguously harmful in several ways but this does not automatically justify the prohibitionist policy dictated by the international drugs conventions this paper sets out the arguments for policy intervention in the cannabis market and reviews the directions of policy change that have been called for we argue that existing theoretical insights and empirical evidence give little compelling reason to prefer prohibition to the alternative of legalization of cannabis with harms controlled by regulation and taxation given this conclusion and the much wider prevalence of cannabis than of harder drugs a reasonable way forward is to remove cannabis production and consumption but not trade from the current prohibitionist un drug control treaties to allow countries to adopt their own policies thus generating new evidence on the potential impacts of a wider range of policy stephen pudney

market failure in incentive based regulation the case of emissions trading abstract among the existing evaluations of the us epa s emissions trading program a consensus has emerged while the program has resulted in significant cost savings it has not even approximately achieved a cost effective allocation of the control responsibility the cost savings have been smaller and the trades fewer than might have been expected at the outset of the program in this article we explore one hypothesis which purports to explain the divergence between the cost minimizing and the observed pattern of trades for nonuniformly mixed pollutants the trading process hypothesis attributes some significant proportion of this divergence to the nature of the process by which emission reduction credits are traded under the bubble policy an examination of actual bubble trades reveals that the actual trading process is sequential and bilateral and hence differs considerably from the implicit process modeled in the existing empirical studies simulations of this more realistic trading process suggest that the resulting equilibria deviate considerably from cost effective allocations of the control responsibility

country of origin effects for uni national and bi national products this study examines the effects of country of origin and brand name cues on consumer evaluations of uni national and bi national products and estimates the perceived values of such cues from personal interviews with a regional quota sample of household residents the study found the salience of country of origin in product evaluations under within subject experimental design finally managerial implications are discussed in regards to international branding and sourcing strategies

brand popularity country image and market share an empirical study this study examines how brand popularity in conjunction with other marketing variables influences market share directly as well as indirectly by interacting with country related intangible assets or simply country image the results of our empirical analysis show that a competitive analysis without the recognition of country image would be misleading we found that country specific intangible assets exist and that they significantly interact with marketing variables differently for u s and japanese brands in the subcompact car market in the usa brand popularity and advertising were found to be key factors for intangible assets for both the u s and the japanese brands brand popularity was the most significant factor for market share in both the short run and the long run japanese firms direct investment fdi in the target country directly influenced market share only in the short run several important implications for international marketing are presented

trading sulphur emissions in europe guided bilateral trade in this paper a system of guided permit trading is developed for so2emissions reduction which considers permit trading as a bilateral andsequential process this implies that in order to meet the deposition targetsat the end of the trading process not every single trade transaction hasto meet the deposition targets to ensure that the target is ultimately met the number of permits traded should be controlled by a trade coordinatinginstitution a simulation of the system of guided bilateral trading ofso2 permits among european countries on the basis of the secondso2 protocol indicates that some non profitable trade transactionstake place this prevents the cost effective emission allocation from beingfully achieved however the calculations show that guided bilateral permittrading may generate substantial cost savings while contributing toenvironmental protection

a meta analysis of country of origin effects this note reports a quantitative analysis of the country of origin coo effect based on fifty two articles or papers containing sixty nine independent studies and 1 520 effect sizes an analysis of fifteen study characteristics revealed that country of origin effects are only somewhat generalizable using omega squared as the measure of effect size verbal product descriptions produced larger coo effect sizes than did the presence of an actual product likewise single cue studies produced larger coo effect sizes than did multiple cue studies and larger samples produced effect sizes that on average were greater than those produced by smaller samples the size of an observed coo effect was a function of whether the dependent variables was a quality reliability perception or a purchase intention the average effect size of quality reliability perceptions was 30 whereas the average effect size for purchase intentions was 19 purchase intentions were most susceptible to methodological artifacts than were quality reliability perceptions study findings selectively confirm and refute common beliefs regarding the impact of a country of origin cue on product perceptions and purchase intentions

rational addiction with learning and regret we present a theory of rational behavior in which individuals maximize a set of stable preferences over goods with unknown addictive power the theory is based on three fundamental postulates that consumption of the addictive good is not equally harmful to all that individuals possess subjective beliefs concerning this harm and that beliefs are optimally undated with information gained through consumption although individual actions are optimal and dynamically consistent addicts regret their past consumption decisions and regret their initial assessment of the potential harm of the good addict prone individuals who believe it could not happen to them are most likely to be drawn into a harmful addiction

the impact of private hospital insurance on the utilization of hospital care in australia abstractwe use the australian national health survey to estimate the impact of private hospital insurance on the propensity for hospitalization as a private patient we account for the potential endogeneity of supplementary private hospital insurance purchases and calculate moral hazard based on a difference of means estimator we decompose the moral hazard estimate into a diversion component that is due to an insurance induced substitution away from public patient care towards private patient care and an expansion component that measures a pure insurance induced increase in the propensity to seek private patient care our results suggest that on average private hospital insurance causes a sizable and significant increase in the likelihood of hospital admission as a private patient however there is little evidence of an expansion effect the treatment effect of private hospital insurance on private patient care is driven almost entirely by the substitution away from public patient care towards private

discrimination empirical evidence from the united states the study of discrimination received a major impetus in the 1960 s when increasing social attention focused upon race and gender differentials in market outcomes gary becker s the economics of discrimination 1957 strongly influenced empirical research by providing a definition of wage discrimination and suggesting a specific way in which it might operate during the following years new theories were developed and refined in an attempt to explain why there appears to be continued discrimination in spite of market forces presumably operating against it similarly a large amount of empirical work has been done to determine whether and how much discrimination actually exists and to a lesser extent to test the implications of the various theories even so the hope expressed by becker in the preface of the second edition 1971 that our understanding of discrimination would increase so rapidly that the materials in his book would become obsolete before another decade began has clearly not been fulfilled here we review what has been learned in the intervening years and suggest some fruitful directions for future research 1 the focus of this paper like that of most of the empirical research in this area is on determining the extent of discrimination rather than on testing alternative models of discrimination

the impact of alcohol consumption on occupational attainment in england in this study we provide evidence on the effect of alcohol consumption on occupational attainment in england to do this we use samples of employees from the health survey for england between 1992 and 1996 we find that owing to the endogenous nature of alcohol consumption ols estimates may provide a biased picture of the impact of alcohol consumption on occupational attainment using various sets of instrumental variables we find positive and significant returns to moderate levels of drinking for male and female employees which drop off rapidly as consumption increases

do drinkers earn less theoretical work by becker and others on human capital led initially to empirical research on the determinates of earnings interest in human capital has now spread to other areas especially health this movement is in conjunction with societal concerns regarding the role of diet and environmental factors on human well being and performance following becker 1 and grossman 9 economists expect to find a significant relationship between health and earnings health aspects of human capital have been extensively explored since the early work of grossman 9 10 good health is both beyond the control of the individual exogenous as a result of genetic factors and random events and controllable endogenous through the regulation of activities such as smoking drinking eating exercise and other informed choices this study examines the relation between earnings and drinking curiously little rigorous empirical work has been done on the relation between earnings and drinking irving fisher s claim to the contrary 1 there is little evidence that prohibition led to substantial if any productivity increases although it is established that excessive drinking leads to poor health the empirical evidence regarding earnings and drinking is mixed and inconclusive according to the u s government abusive drinkers earn less in their biennial reports to congress the national institute on alcohol abuse and alcoholism niaaa estimates the economic cost to society of alcohol abuse approximately half of this cost arises from the estimated loss in earnings productivity due to abusive drinking 2 their approach consists of estimating a wage equation which includes human capital variables as well as a dichotomous abusive drinking variable and quantity of alcohol consumed 3 berger and leigh 3 used a sample selection model to test whether drinkers earned more or less than nondrinkers they divided their sample from the 1972 73 quality of employment survey into two categories drinkers and nondrinkers using a sample selection correction estimator hedonic wage regressions for each category and by sex were estimated they found that drinkers moderate and abusive combined earned more than nondrinkers comparisons were then made between wages from each regression with demographic and human capital variables set at

trends in earnings differentials by gender 1971 1981 this paper clarifies trends in relative earnings by sex over the decade 1971 1981 and decomposes these trends to determine which factors contributed to a decline and which to an increase our analyses are based upon data from the annual demographic files of the current population survey for 1972 and 1982 this study is unique in that it estimates earnings functions in each year which are corrected for selectivity bias it is found that such a correction markedly raises the progress of white women relative to men among blacks the impact of the selectivity bias correction was to substantially lower the relative earnings increase of women however the coefficients on the selectivity variable were not significant the findings suggest declining sex role specialization and discrimination as conventionally measured over the decade on the other hand contrary to expectations the total effect of variables reflecting the sex composition of the individuals occupation worked to widen the sex differential over the period the sex differential was also adversely affected by a decline in the relative return to education especially for whites authors modified

psychiatric disorders and labor market outcomes evidence from the national comorbidity survey replication this paper uses the national comorbidity survey replication to estimate effects of recent psychiatric disorder on employment hours worked and earnings we employ methods proposed in altonji et al 2005a which use selection on observable traits to provide information regarding selection along unobservable factors among males disorder is associated with reductions in labor force participation and employment when selection on observed characteristics is set equal to selection on unobserved characteristics the magnitudes of these effects for males are 9 and 14 percentage point reductions for participation and employment respectively among females we find negative associations between disorder and labor force participation and employment but these estimates are more sensitive to assumptions about selection there are no effects of disorder on earnings or hours worked among employed individuals

an intergenerational model of wages hours and earnings we develop a model in which a set of unobserved parental and sibling factors drives wages and work preferences these factors lead to similarities within families in wages work hours and earnings we estimate the model using data on parents and siblings in the national longitudinal surveys we find that parental and sibling wage factors influence the wages of both sons and daughters we also find strong similarities in work hours that run along gender lines and are due primarily to linkages in preferences the effect of wages on earnings is direct rather than through a labor supply response

addiction and cue triggered decision processes we propose a model of addiction based on three premises 1 use among addicts is frequently a mistake 2 experience sensitizes an individual to environmental cues that trigger mistaken usage 3 addicts understand and manage their susceptibilities we argue that these premises find support in evidence from psychology neuroscience and clinical practice the model is tractable and generates a plausible mapping between behavior and the characteristics of the user substance and environment it accounts for a number of important patterns associated with addiction gives rise to a clear welfare standard and has novel implications for policy

a theory of rational addiction we develop a theory of rational addiction in which rationality means a consistent plan to maximize utility over time strong addiction to a good requires a big effect of past consumption of the good on current consumption such powerful complementarities cause some steady states to be unstable they are an important part of our analysis because even small deviations from the consumption at an unstable steady state can lead to large cumulative rises over time in addictive consumption or to rapid falls in consumption to abstention our theory also implies that cold turkey is used to end strong addictions that addicts often go on binges that addicts respond more to permanent than to temporary changes in prices of addictive goods and that anxiety and tensions can precipitate an addiction

the effect of illicit drug use on the wages of young adults this article examines the effects of cocaine and marijuana use on the wages of young adults the endogeneity of drug use in a wage equation is considered and a two stage least squares procedure is implemented the results suggest that increased use of marijuana or cocaine is associated with higher wages the positive relationship between drug use and the wage does not diminish with age i also investigate whether systematic differences in the return to measures of human capital investments can explain the positive relationship between drug use and wages

matching product catgeory and country image perceptions a framework for managing country of origin effects the study of country of origin coo effects examines how consumers perceive products emanating from a particular country this study examines coo in terms of the fit between countries and product categories a framework is suggested which matches the importance of product category dimensions with the perceived image of the country of origin along the same dimensions such matches or mismatches can be either favorable or unfavorable managers can use product country match information to assess consumers purchase intentions and assist them in managing their product s coo data collected from consumers in ireland mexico and the united states demonstrate the product country match framework and its strategic implications

customer evaluation of products in a global market marketing scholars interest in the influence of source countries on product evaluations has intensified during the past twenty five years as this research tradition has evolved the literature has gradually gained more depth and sophistication nevertheless research in this area lacks a common conceptual framework furthermore research priorities with regard to the role of this area of inquiry within the broader field of consumer behavior marketing and general business decisions have not been made clear this article rationalizes the buying decision processes within the context of source country influences and offers a conceptual framework for further development in addition it links country level considerations to firm level decisionmaking thus providing a foundation for meaningful managerial decisions

designing organizations for trading pollution rights regulators and academicians have recently become interested in using a marketable permits program as a new way to control aggregate pollution emissions our research focuses on choosing a permit trading mechanism that is both economically efficient and politically viable we consider an organized trading process and a revenue neutral auction both of which involve an initial allocation of permits based on past history each is tested in a competitive and in a non competitive environment to determine which mechanism performs best the results of our research suggest that overall the organized trading process outperforms the revenue neutral auction

trade offs in designing markets with multiple objectives abstract this paper explores some of the problems involved in designing markets with multiple objectives the first part of the paper considers the issue of how such markets are designed in theory while the second part reviews some evidence on actual applications in the field of air pollution control

economic prescriptions for environmental problems how the patient followed the doctor s orders o ne of the dangers with ivory tower theorizing is that it is easy to lose sight of the actual set of problems which need to be solved and the range of potential solutions as one who frequently engages in this exercise i can attest to this fact in my view this loss of sight has become increasingly evident in the theoretical structure underlying environmental economics which often emphasizes elegance at the expense of realism in this paper i will argue that both normative and positive theorizing could greatly benefit from a careful examination of the results of recent innovative approaches to environmental management the particular set of policies examined here involves two tools which have received widespread support from the economics community marketable permits and emission charges pigou 1932 dales 1968 kneese and schultze 1975 both tools represent ways to induce businesses to search for lower cost methods of achieving environmental standards they stand in stark contrast to the predominant command and control approach in which a regulator specifies the technology a firm must use to comply with regulations under highly restrictive conditions it can be shown that both of the economic approaches share the desirable feature that any gains in environmental quality will be obtained at the lowest possible cost baumol and oates 1975 until the 1960s these tools only existed on blackboards and in academic journals as products of the fertile imaginations of academics however some countries have recently begun to explore using these tools as part of a broader strategy for managing environmental problems

illegal drug use and employment this article investigates the relationship between employment and the use of marijuana and cocaine for males in national longitudinal survey of youth data from 1984 and 1988 previous studies yielding mixed evidence may have inadequately accounted for the simultaneity between drug consumption and employment i implement an instrumental variable procedure that identifies drug use with variables that are empirically unrelated to employment including the regional cocaine price and a state marijuana decriminalization indicator results indicate that the use of each drug substantially reduces the likelihood of employment exogeneity tests reveal that standard probit estimates are severely biased toward zero

improving efficiency in bilateral emission trading when environmental damages from emissions are spatially nonuniform permit trading has been modeled most often as a pollution offset program in which emission permits are traded between agents subject to constraints on ambient air quality to date the institution envisioned to implement such a program involves trading on a bilateral and sequential basis however simulation studies indicate that the sequence of trades may alter the outcome and undermine the cost savings from a pollution offset program this paper identifies a design for the trading institution that tends to overcome this phenomenon and improve the efficiency of equilibria obtained in a simulation model we model a bilateral trading process for the reduction of sulfur dioxide emissions with a stochastic description of the sequence of trades within groups of nations in europe when trading takes place between disaggregated stylistic representations of economic enterprises rather than between national governments a significantly greater portion of potential savings is achieved in fact under most sets of assumptions approximate first order stochastic dominance is achieved wherein the more decentralized the trading agents the greater the expected savings from a trading program

the economic case against drug prohibition this paper discusses the costs and benefits of drug prohibition it offers a detailed outline of the economic consequences of drug prohibition and a systematic analysis of the relevant empirical evidence the bottom line is that a relatively free market in drugs is likely to be vastly superior to the current policy of prohibition

the socioeconomic determinants of ill gotten gains within person changes in drug use and illegal earnings generalizing from the sociology of earnings attainment we develop a conceptual model of social embeddedness in conventional and criminal activities to explain illegal earnings among criminal offenders to isolate the effects of time varying factors such as legal earnings drug use and criminal opportunities we use data from the national supported work demonstration project to estimate fixed effects models predicting month to month changes in illegal earnings we find that criminal earnings are sensitive to embeddedness in conforming work and family relationships criminal experience and the perceived risks and rewards of crime moreover heroin and cocaine use creates a strong earnings imperative that is difficult to satisfy in the low wage labor market and offenders earn far more money illegally when they are using these drugs than during periods of abstinence

a selectivity model of employer size wage differentials this article investigates wage differentials for employees of different size firms utilizing an econometric methodology that allows the size of employer to be treated as endogenous in the context of discrete ordered employer size data as a result we are able to estimate i employer size wage gaps which are corrected for selectivity bias and ii the magnitude and direction of the selection bias decompositions of the resulting wage differentials are computed with comparisons of the conditional on sorting across employer size and unconditional wage gaps

the demand for illicit drugs i introduction illicit drug use and alcohol abuse imposes significant costs on society and on the individual users these costs include increased crime health problems and employment problems because of these considerable costs government at all levels has made drug control and the control of alcohol abuse important priorities the federal government has undertaken an aggressive program of interdiction of drug shipments and eradication of drug crops in the field the federal government and the state governments have also increased their criminal justice efforts in analyzing the effect of government drug control programs economists have applied the conventional supply and demand model to illicit drug markets the model includes a demand function that is downward sloping with respect to price and a supply function that is upward sloping or horizontal with respect to price drug programs like interdiction and drug sanctions are assumed to reduce supply and raise equilibrium price other policy options such as some form of drug legalization could increase supply and reduce equilibrium price the effect of these policies on equilibrium quantity is dependent on the elasticity of demand and on whether demand shifts since not much is known about drug price elasticities the potential effects of various drug control policies remain a speculative exercise the purpose of this paper is to estimate the effects of alcohol and drug prices on alcohol use and drug participation both own price and cross price effects are estimated there are few prior empirical studies of the effect of drug prices because data have been difficult to acquire this paper makes use of newly available data on drug prices and is the first paper to link these data to a nationally representative drug use data set of 49 802 individuals estimates of drug price elasticities are important empirical evidence that drug sales can be characterized by market forces drug price elasticities are also important in estimating the likely impact of policies that affect drug prices and in estimating the effects of drug prohibition cross price elasticities are important to estimate since they suggest the likely effects of policies such as an increase in alcohol taxes on illicit drug participation and the effects of marijuana decriminalization on alcohol cocaine and heroin use ii prior studies while there are a number of prior studies of the effects of alcohol prices and policies there are few prior studies of drug prices and polices the reason for so few prior drug studies is the limited amount of data on drug prices and the limited options for linking these data to an individual record by residential area this study uses a new data set of cocaine and heroin prices from the drug enforcement agency that was linked to individual records by the office of applied studies at the substance abuse and mental health services administration leung and phelps 1993 provide a review of a number of recent alcohol demand studies the empirical literature provides considerable evidence that shows increasing the price of alcoholic beverages to decrease alcohol use alcohol demand studies generally estimate price elasticities for beer wine and spirits separately most studies employ aggregate data but a few use individual data studies using aggregate data find price elasticities for beer from about 2 to about 1 0 for wine from about 3 to about 1 8 and for spirits from about 3 to about 1 8 studies using individual data estimate price elasticities for beer from about 5 to about 3 0 for wine at about 5 and for spirits from about 5 to about 4 0 the few prior studies of the effect of decriminalization on marijuana use generally find that marijuana decriminalization has no effect on participation pacula 1994 thies and register 1993 dinardo and lemieux 1992 and johnston o malley and bachman 1981 all used samples of young people and found no effect of marijuana decriminalization

labor market effects of marijuana and cocaine use among young men using data on marijuana and cocaine use from the 1984 national longitudinal survey of youth the authors examine the hypothesis that drug use reduces labor market productivity as measured by wages from an analysis that controls for the probability of employment and the endogeneity of drug use they find that although long term and on the job use of marijuana negatively affected wages the net productivity effect for all marijuana users both those who engaged in long term or on the job use and those who did not was positive no statistically significant association was found between cocaine use and productivity

transaction costs and tradeable permits abstract tradeable permit systems are at the center of current interest and activity in market based reforms of environmental policy because these systems can offer significant advantages over conventional approaches to pollution control unfortunately claims made for their relative cost effectiveness have often been exaggerated transaction costs which may be significant in these markets reduce trading levels and increase abatement costs in some cases equilibrium permit allocations and hence aggregate control costs are sensitive to initial permit distributions providing an efficiency justification for politicians typical focus on initial allocations

effects of consumer preferences for foreign sourced products when deciding on overseas production locations the manager must take into account not only resource and cost benefits but the effect that country of origin may have on consumer evaluations an experiment conducted by a telephone survey procedure examined country of origin perceptions of twelve countries and eight products using both perceived quality and choice measures as hypothesized preferences were found to be more product specific for industrialized than less developed countries in addition hypotheses that performance risk and brand moderate the effects of country were upheld under most conditions

the effect of alcohol use on wages 1988 the effect of alcohol use on wages applied economics vol 20 no 10 pp 1343 1351

the effects of male and female labor supply on commodity demands we examine the effects of male and female labor supply on household demands and present a simple and robust test for the separability of commodity demands from labor supply using data on individual households from six years of the uk fes we estimate a demand system for seven goods which includes hours and participation dummies as conditioning variables allowance is made for the possible endogeneity of these conditioning labor supply variables we find that separability is rejected furthermore we present evidence that ignoring the effects of labor supply leads to bias in the parameter estimates

gender differences in labor market effects of alcoholism little is known about the role of specific health problems in affecting labor market productivity even less is known about gender differences in the labor market effects of such health problems current knowledge of health effects is based largely on samples composed exclusively of men a common practice in both economics and health research in the latter case even a congressional mandate to incorporate females in study samples is reputed to have had little effect patricia schroeder 1990 in this study we attempt to determine the structure of gender differences in labor market responses to alcoholism we use a relatively new data source that allows such comparisons by gender in a large community based sample previous studies have established that there are significant gender differences in labor market behavior differences in prevalence rates of alcoholism by gender are also well established it is estimated that 3 percent of females are currently suffering from alcoholism and twice that many have exhibited symptoms at some time for males the numbers are 10 and 20 percent respectively there is some medical evidence to indicate that physiologically women and men respond differently to alcohol for example a recent study suggests that women have greater vulnerability to the acute and chronic health conditions associated with alcoholism mario frezza et al 1990

a pint a day raises a man s pay but smoking blows that gain away this paper studies the wage effects of the use of alcohol and tobacco the analysis based on a recent survey in the netherlands shows that for males the use of tobacco has a negative wage effect of about 10 while the use of alcohol has a positive wage effect of about the same size the wages of females are not affected by smoking and drinking

cannabis use and its effects on health education and labor market success cannabis is the most popular illegal drug its legal status is typically justified on the grounds that cannabis use has harmful consequences empirically investigating this issue has been a fertile topic for research in recent times we provide an overview of this literature focusing on studies which seek to establish the causal effect of cannabis use on health education and labor market success we conclude that there do not appear to be serious harmful health effects of moderate cannabis use nevertheless there is evidence of reduced mental well being for heavy users who are susceptible to mental health problems while there is robust evidence that early cannabis use reduces educational attainment there remains substantial uncertainty as to whether using cannabis has adverse labor market effects

the endogeneity of union status an empirical test an unsettled issue in the literature relating to the relative wage effect of unions is the appropriate treatment of union status in a wage determination model in the context of a three equation model determining union membership and union and nonunion sector wage rates this paper presents an instrumental variables iv procedure for estimating the parameters of the wage equations and a test of the exogeneity of union status using the hausman specification test an advantage of our iv procedure in comparison to the widely used inverse mill s ratio procedure is that our procedure is a distribution free estimator whereas the inverse mill s ratio estimator hinges in the assumption that the error term of the choice equation is normally distributed using data for a sample of middle aged white workers we estimate the parameters of the union and nonunion wage equations with both procedures on the key question of the endogeneity of union status the hausman test decisively rejects the null hypothesis of exo

illicit drug use and labour market achievement evidence from the uk this study using data from the british crime survey bcs examines the effect of drug use on occupational achievement it starts by attempting to overcome the identification problem that results from the limited set of drug use questions presented in the bcs taking this into account and allowing for the endogeneity of drug use in equations for unemployment and labour market outcomes that a mild positive association with soft drugs and occupational achievement is observed that diminishes with age this relationship holds for males but not for females in contrast it is also found that past use of hard drugs significantly increases the likelihood of current unemployment although it appears to be unrelated to occupational success conditional on achieving employment

keeping off the grass an econometric model of cannabis consumption in britain this paper presents estimates of a dynamic individual level model of cannabis consumption using data from a 1998 survey of young people in britain the econometric model is a split population generalization of the non stationary poisson process allowing for separate dynamic process for initiation into cannabis use and subsequent consumption the model allows for heterogeneity in consumption levels and behavioural shifts induced by leaving education and the parental home copyright 2004 john wiley sons ltd

labor market discrimination against hispanic and black men h ispanic american men have lower average wage rates than white non hispanics in 1975 the average white non hispanic male wage earner in the united states earned 5 97 an hour mexican men earned 4 31 72 as much as white non hispanics puerto rican men earned 4 52 76 as much and cuban men earned 5 33 89 as much as white non hispanics by way of comparison black men s average wages in 1975 were 4 65 78 of the white male wage several possible reasons for the hispanics lower wages come to mind among them are age and education geographic location immigration language difficulties and discrimination for example as shown in table 1 mexicans and puerto ricans are younger on average than the white non hispanic population and earnings tend to rise with age hispanics have lower average levels of education than white non hispanics and wages are positively associated with education many mexican americans live in the southwest where prices are relatively low moreover hispanics are more likely to be recent immigrants and to lack fluency in english than white non hispanics and so to be at a disadvantage in the labor market in addition there is a widespread belief that hispanics suffer from employment discrimination and cannot obtain the wages that their human capital would command if they were non hispanic whites how much of the wage differentials described above are due to each of these factors and to other inter group differences in wage related characteristics in particular how much impact does labor market discrimination have on the average hispanic man s wage and how does this compare with discrimination against blacks this paper provides answers to these questions a few other efforts have been made to analyze the relative earnings of hispanic and white nonhispanic men using 1960 and 1970 census data fogel 1966 poston and alvirez 1973 poston alvirez and tienda 1976 long 1977 and gwartney and long 1978 we use more recent data from the 1976 survey of income and education this data set enables us to measure wage rates more accurately and to specify the wage function more completely than does the census unlike previous analysts in estimating the wage function we take account of possible selectivity bias due to the distinction between average wage offers and average observed wages thus we hope to obtain a more accurate and up to date measure of labor market discrimination against hispanic men section ii explains the method used to separate the minority white non hispanic wage differential into the portions due to differences in average characteristics and the portion due to differences in unobserved factors and discrimination taking into account the possibility of selectivity bias in the observed wage sample section iii describes the data used in the study and the specification of the wage equation the breakdown of the observed wage differentials into components due to differences in participation in the wage and salary sector local price levels average characteristics and discrimination are presented in section iv section v summarizes our findings and discusses their implications for efforts to improve the economic situation of hispanics in the united states

taxes cigarette consumption and smoking intensity this paper analyses the compensatory behavior of smokers exploiting data on cotinine concentration a metabolite of nicotine measured in a large population of smokers over time we show that smokers compensate for tax hikes by extracting more nicotine per cigarette our study makes two important contributions first as smoking a given cigarette more intensively is detrimental to health our results question the usefulness of tax increases second we develop a model of rational addiction where agents can also adjust their intensity of smoking and we show that the previous empirical results suffer from estimation biases

estimation in a class of simultaneous equation limited dependent variable models estimation in a class of simultaneous equation limited dependent variable models is considered the minimum chi squared method is used to compare the asymptotic relative efficiency of marginal and new conditional maximum likelihood estimators for this class of models efficient minimum chi squared estimation procedures are described a two step algorithm based on a conditional maximum likelihood estimator provides a natural framework for both computing a linearized and locating the joint maximum likelihood estimator the unimodality of the simultaneous equation tobit likelihood function is proved and this model is used to illustrate the empirical application of some of the estimators considered in the paper the relative efficiency of these estimators in the simultaneous equation tobit model is examined in a set of monte carlo experiments many applications of microeconomic theory to individual data face the joint problems of censoring and simultaneity in particular the dependent variable under investigation may not be continuously observed and some of the conditioning variables representing the outcome of other decisions by the individual may be simultaneously determined smith and blundell 1986 developed an asymptotically efficient test for exogeneity or simultaneity in the simultaneous equation tobit model as a byproduct a conditional maximum likelihood estimator was obtained which is consistent under the alternative hypothesis of simultaneity nelson and olsen 1978 amemiya 1978 1979 and heckman 1978 consider a number of consistent marginal maximum likelihood estimators based on marginal maximum likelihood estimators of the reduced form parameters for the probit and tobit models in contrast the estimator derived from smith and blundell 1986 is based on the corresponding conditional maximum likelihood estimators this paper is concerned with estimation in a class of simultaneous limited dependent variable regression models which includes the simultaneous probit and tobit models as special cases analogous marginal and conditional maximum likelihood estimators to those of nelson and olsen 1978 amemiya 1978 1979 heckman 1978 and smith and blundell 1986 are derived and other new estimators are suggested the minimum chi squared approach discussed by ferguson 1958 malinvaud 1970 and rothenberg 1973 is used to compare the asymptotic relative efficiency of various estimators considered a simple two step algorithm based on the conditional maximum likelihood

alcoholism work and income this article reports on an empirical analysis of the relationships between alcoholism and income and working we show that the relationships between alcoholism and labor market success have important age or life cycle dimensions we present evidence that alcoholism may affect income more by restricting labor market participation than by affecting the wages of workers finally we demonstrate that the effects of alcoholism on earnings depend on the extent to which one controls for other covariates associated with alcoholism as such we suggest that there may be important indirect as well as direct effects of alcoholism on labor market success

an econometric analysis of coca eradication policy in colombia abstract we estimate an econometric model of coca production in colombia our results indicate that coca eradication is an ineffective means of supply control as farmers compensate by cultivating the crop more extensively the evidence further suggests that incentives to produce legal substitute crops may have greater supply reducing potential than eradication

illicit drug use unemployment and occupational attainment in this paper we use data from the british crime survey bcs to examine the effect of illicit drug use on labour market outcomes we find very little evidence to support any relationship between drug use hard or soft and occupational attainment however we find compelling evidence to suggest that drug use particularly the use of opiates cocaine and crack cocaine is associated with an increased risk of unemployment regardless of age or gender

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

who uses illegal drugs gary becker and kevin murphy 1988 present a theoretical model of rational addiction that requires information on past present and future prices they do not study illegal drugs empirically in this and their related papers a major data source is the annual survey of high school seniors hss also known as monitoring the future this work is summarized in l johnston et al 1988 they find a growing use of drugs measured by monthly annual and lifetime prevalence over time and differences by region and sex cocaine use showed marked increases from 1976 though this levelled off from 1986 to 1987 they often rely on cross tabs that leaves many variables uncontrolled and the results subject to omitted variable bias j bachman et al 1984 use ordinary least squares ols regressions in which the drug use in the three years post high school is related to various characteristics such as living arrangements while an improvement over cross tabs ols applied to categorical dependent variables yields inefficient estimates see m nerlove and s press 1973 johnston et al used follow up surveys of a subsample drawn from each cohort they find the use of some drugs decline at older ages say 35 though they do not determine if the heavy users have died dropped out of the sample or have been rehabilitated the hss s initial restriction to high school seniors removes about 30 percent of the population who drop out of high school perhaps because of taking drugs studies based on the national institute of drug abuse nida sample of people 12 and older show some heavy drug use of people less than 17 years old see j d miller et al 1982 and nida 1985 richard clayton 1985 using the 1980 hss presents univariate regressions that shows the frequency of use of cocaine is positively related to lifetime marijuana use and days out of school in the past month but negatively related to high school grade point average h abelson and miller 1985 using the nida surveys covering 1974 82 show differences in the percentage using cocaine by education and race for lifetime 12 months and last month measures they find strong trends d kandel 1980 presents a recent survey of drinking and drug use among youth people in their late 30 s mature out of heroin use rather than die

a cross cultural study of made in concepts cross cultural studies of the perceptions of countries of origin by industrial users have been few but they are important because of their managerial implications for multinational firms this study uses data obtained from american and french directors of purchasing of major industrial firms concerning their perceptions of 5 major made in concepts after the data were corrected for response bias results show both how the respondents perceive the made in concepts and the differences between the american and french perceptions

exogenous shocks and related goods drinking and the legalisation of marijuana abstract the paper uses the substitutability between goods to model the transmission to other products of a consumption shock to one product the framework is used to analyse the impact on drinking of legalisation of marijuana for all types of consumers for example the results indicate that legalisation would lead to approximately a 4 increase in marijuana consumption while beer wine and spirits consumption would fall by 1 2 and almost 4 respectively

employment wages and alcohol consumption in russia 1 introductionconcerns regarding the relationship between alcohol consumption and labor market productivity are well grounded if problem drinking or alcoholism is considered a disease then it may have depressant effects on labor market productivity causing reductions in employment earnings and other labor market outcomes mullahy and sindelar 1993 1996 kenkel and ribar 1994 however there is a medical literature that documents a u shaped relationship between alcohol consumption and the risk of cardiovascular disease according to this literature moderate drinkers have a lower risk of cardiovascular disease than do either abstainers or heavy drinkers beaglehole and jackson 1992 doll et al 1994 consistent with this evidence several economists have found a positive association between moderate drinking and earnings berger and leigh 1988 french and zarkin 1995 heien 1996 hamilton and hamilton 1997 zarkin et al 1998 macdonald and shields 2001 this article investigates the impact of alcohol consumption on employment and wages in russia the primary contributions of the article are twofold first it enhances the economic literature on the relationship between alcohol consumption and labor market behavior by using data from a longitudinal survey the use of a longitudinal data set enables the estimation of a fixed effects model which helps avoid the potential bias caused by unobserved individual factors not captured in cross sectional models the use of a fixed effects model is an important extension to the literature because the data sets used in previous studies are cross sectional and usually lack adequate variables that could serve as identifying instruments to control for the endogeneity of alcohol consumption 1 furthermore the richness of the data set used in this article allows for the application of three alternative measures of alcohol consumption in the empirical analysis this is important because the relationship between alcohol consumption and labor market outcomes may be sensitive to the alcohol measure that is used the second notable contribution of this article is that it provides the first empirical evidence on the association between alcohol consumption and labor market outcomes in russia excessive alcohol consumption is a widespread problem in russia where per capita alcohol consumption is around 14 liters per year the world health organization who considers 8 liters to be a sign that a country has a critical consumption level for health problems quinn judge 1997 furthermore the dramatic fluctuations in mortality rates experienced in russia over the past 15 years have generated considerable attention to the potential effect of alcohol consumption on the overall health of the russian population it is important to investigate how labor market outcomes would be affected by alcohol consumption in a country which demonstrates such dramatic fluctuations in alcohol consumption and mortality consistent with the previous studies cross sectional results generally support the hypothesis of an inverse u shaped relationship between alcohol consumption and wages and employment results from the fixed effect models are found to be quite different from those of cross sectional models the positive effect of alcohol consumption on employment disappears for both males and females once the individual fixed effects are controlled for the results of the wage model lend support to a small and linear return to alcohol consumption but the effects are significant only at the 10 level the fixed effects estimates are smaller in magnitude and estimated with less precision compared with cross sectional estimates section 2 reviews the previous literature section 3 discusses the conceptual issues and empirical strategy section 4 introduces the data set section 5 provides a discussion of the results and sensitivity analyses section 6 concludes the article

alcohol and earnings does drinking yield a wage premium this paper examines the relationship between alcohol consumption and earnings for prime age males wage differentials for non moderate and heavy drinkers are estimated using a polychotomous choice model which accounts for the endogenous relationship be tween drinking and earnings we find that moderate alcohol consumption leads to increased earnings relative to abstention however heavy drinking leads to reduced earnings relative to moderate drinking heavy drinkers possess flatter age earnings profiles and attain lower returns for higher education than non and moderate drinkers these results are in contrast to previous research on substance abuse which finds no earnings drop off for heavy users

an exogeneity test for a simultaneous equation tobit model with an application to labor supply a test of weak exogeneity in the simultaneous equation tobit model is proposed and illustrated using a female labour supply model estimated using cross section data the test statistic can be simply output from any standard tobit maximum likelihood package and is asymptotically efficient the procedure provides consistent estimators for the simultaneous tobit model whose asymptotic covariance matrix is a simple extension of the usual tobit formula we also provide the lagrange multiplier test of weak exogeneity this abstract was borrowed from another version of this item

country image and consumer based brand equity relationships and implications for international marketing this paper examines the relationships between consumers country level and product level images of a country and the equity they associate with a brand from that country using canonical correlation analysis results from mallintercept surveys conducted in an australian state capital city indicated that the consumer based equity of a brand was significantly associated with both the macro and micro images of the country of origin of the brand the relationship between these two sets of constructs was found to be positive as well as product category specific furthermore each consumer based brand equity dimension contributed differently to the relationship according to the product category while the contribution of both country image dimensions macro and micro was also product category specific results also showed that cars as a product category are more sensitive to country image than televisions these findings have direct and important implications for international marketers

nigerian consumer attitudes toward foreign and domestic products the nigerian consumer obsession with foreign made goods has had a detrimental effect on the domestic manufacturing industry this paper uses conjoint analysis to investigate the importance of a product s country of manufacture relative to other attributes in the nigerian consumer choice it was found that the country of manufacture is significantly more important than price and other product attributes in consumer preference nigerian consumers have a negative image of the made in nigeria label rating it lower than labels from more economically developed countries additional analyses indicate that the superior reliability and technological advancement of foreign products are the most important correlates of the nigerian consumer s likelihood to purchase foreign products implications for foreign marketers domestic governments and domestic manufacturers are discussed

employment unemployment and problem drinking the misuse of alcohol is estimated to result in enormous economic costs composed largely of reduced labor market productivity however there has been debate on this issue the purpose of this paper is to help to resolve this debate by presenting sound structural estimates of the relationship between measures of problem drinking and of employment and unemployment the analysis is based on the 1988 alcohol supplement of the national health interview survey we find that for both men and women problem drinking results in reduced employment and increased unemployment

does drug use lower wages this study using microdata from the 1980 and 1984 waves of the national longitudinal survey of youth examines the effects of drug use on wages and employment contrary to most previous researcher