Experiments are becoming increasingly popular in economics principles classes as a way to gain student interest in a rather abstract subject. This experiment examines the market for illegal drugs, such as marijuana, and the effects of loosening government intervention on it. While the media tends to focus on the ‘normative’ aspects of drug legislation, students explore the ‘positive’ effects that such legislation would produce. This paper contains detailed instructions on the experiment, including a discussion of decriminalization and legalization, and ends with empirical research on the drug market, a discussion of sin taxes, and the economic costs associated with drug use.
CaulkinsJonathan. 1998. What Price Data Tell Us About Drug Markets. Journal of Drug Issues28(3): 593–612.
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ChaloupkaFrankJ.WechslerHenry. 1996. Binge Drinking in College: The Impact of Price, Availability, and Alcohol Control Policies. Contemporary Economic Policy14(4): 1074–3529.
5.
→ ColanderDavid. 2003. Integrating Sex and Drugs into the Principles Course: Market-Failures Versus Failures-of-Market Outcomes. Journal of Economic Education34(1): 82–91.
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GrossmanMichael. 2004. Individual Behaviors and Substance Use: The role of Price. National Bureau of Economic Research, Working Paper 10948.
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→ MarkowitzSaraGrossmanMichael. 2000. The Effects of Beer Taxes on Physical Child Abuse. Journal of Health Economics19(2): 271–82.
→ MironJeffrey. 2003a. The Effect of Drug Prohibition on Drug Prices: Evidence from the Markets for Cocaine and Heroin. Review of Economics and Statistics85(3): 522–530.
National Association of Convenience Stores. 2005. State Cigarette Excise Tax Rates. http://www.nacsonline.com (22 May 2005).
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NisbitCharlesVakilFirouz. 1972. Some estimates of price and expenditure elasticities of demand for marijuana among U.C.L.A. students. Review of Economics and Statistics63(5): 270–277.
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Office of National Drug Control Policy. 2004. The Economic Costs of Drug Abuse in the United States, 1992–2002. Washington, DC: Executive Office of the President (Publication No. 207303).
→ RuffleBradley. 2003. Competitive Equilibrium and Classroom Pit Markets. Journal of Economic Education34(2): 123–137.
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ThorntonMark. 2004. Drug Policy. Econ Journal Watch1(1): 82–105.
18.
WilliamsJennyChaloupkaFrank J.WechslerHenry. 2005. Are There Differential Effects of Price and Policy on College Students' Drinking Intensity?Contemporary Economic Policy23(1): 78–90.
