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The Effect of Alcohol Availability on Marijuana Use: Evidence from the Minimum Legal Drinking Age

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The Effect of Alcohol Availability on Marijuana Use: Evidence from the Minimum Legal Drinking Age Journal of Health Economics 31 (2012) 112–121 Contents lists available at SciVerse ScienceDirect Journal of Health Economics j ournal homepage: www.elsevier.com/locate/econbase The effect of alcohol availability on marijuana use: Evidence from the minimum legal drinking age a,∗ b Benjamin Crost , Santiago Guerrero a Department of Economics, University of Colorado Denver, Denver, CO 80127, United States b Bank of Mexico, Direccion General de Investigación Económica, Mexico a r t i c l e i n f o a b s t r a c t Article history: This paper exploits the discontinuity created by the minimum legal drinking age of 21 years to estimate Received 16 June 2011 the causal effect of increased alcohol availability on marijuana use. We find that consumption of mar- Received in revised form ijuana decreases sharply at age 21, while consumption of alcohol increases, suggesting that marijuana 12 December 2011 and alcohol are substitutes. We further find that the substitution effect between alcohol and marijuana Accepted 16 December 2011 is stronger for women than for men. Our results suggest that policies designed to limit alcohol use have Available online 13 January 2012 the unintended consequence of increasing marijuana use. © 2012 Elsevier B.V. All rights reserved. JEL classification: I18 Keywords: Alcohol Marijuana Drug use Minimum legal drinking age Regression discontinuity 1. Introduction induce suicides and car accidents (Carpenter and Dobkin, 2009). However, if restricting access to alcohol causes people to switch to Economic theory suggests that when the cost of consuming a substitutes, such as marijuana or other illegal drugs, the benefits of good increases, people will consume more of its substitutes and less reduced alcohol consumption need to be weighed against the cost of its complements. In the case of alcohol, the substitutes are likely of increased consumption of alcohol’s substitutes. The potential to include other intoxicating substances. The minimum legal drink- alcohol substitute we analyze in this paper is marijuana, a sub- ing age (MLDA), which restricts access to alcohol for those under 21, stance made of a mixture of flowers, seeds and leaves of the hemp is therefore likely to affect the consumption of other drugs among plant. The hemp plant contains tetrahydrocannabinol or THC, a psy- that age group, as it sharply decreases the cost of consuming alcohol choactive chemical that produces most of the intoxicating effects. for individuals just over the MLDA. When assessing the costs and Consumption of THC has been associated with cognitive deficits benefits of policies that aim to reduce alcohol consumption – like and changes in brain morphology and psychiatric disorders (Wilson the MLDA or alcohol taxes – we need to take possible substitution et al., 2000; Pope et al., 2003; Hall and Degenhardt, 2009). In this behavior into account. paper we study the effects of an increase in the availability of alco- For example, proponents of the MLDA at age 21 argue that alco- hol on the consumption of marijuana. hol consumption in children and adolescents can cause long term Most previous studies of substitution between alcohol and mar- and, sometimes, irreversible damages to the brain (AMA, 2008). ijuana (e.g. DiNardo and Lemieux, 2001; Chaloupka and Laixuthai, In particular, adolescents who drink are more likely to develop 1997; Pacula, 1998; Williams et al., 2004; Saffer and Chaloupka, smaller hippocampi, a part of the brain that controls learning and 1999; Farrelly et al., 1999) are based on cross-sectional (usually memory, and are more likely to show alterations in their prefrontal between-state) variation in the prices of alcohol and marijuana, cortex (AMA, 2008). Alcohol consumption has also been shown to the MLDA, alcohol taxes, or laws that partially decriminalize mar- ijuana. A problem for these approaches is that state-level prices of alcohol and marijuana and the policies governing their consump- ∗ tion are likely to be correlated with unobserved characteristics of Corresponding author. Tel.: +1 303 315 2036. E-mail address: [email protected] (B. Crost). the population living in those states, making it difficult to infer 0167-6296/$ – see front matter © 2012 Elsevier B.V. All rights reserved. doi:10.1016/j.jhealeco.2011.12.005 B. Crost, S. Guerrero / Journal of Health Economics 31 (2012) 112–121 113 causality from cross-sectional comparisons (Carpenter and Dobkin, increases in the MLDA, are negatively correlated with marijuana 2009). consumption. Focusing on college students, Williams et al. (2004) We address the problem of causal identification that has analyze alcohol and marijuana consumption reported in the Har- plagued previous research through a regression discontinuity vard School of Public Health College Alcohol Study. They find that design. This approach exploits the sharply discontinuous nature campus regulations banning the consumption of alcohol, and to of the minimum legal drinking age, the fact that a person cannot a lesser extent state policies that restrict alcohol consumption, legally purchase alcohol up until the day before her 21st birthday, are negatively correlated with marijuana use. Using data from the but can do so from her 21st birthday onwards. By comparing sub- National Household Surveys on Drug Abuse (NHSDA), Saffer and 1 stance use in individuals just below and just above the age of 21, Chaloupka (1999) find that, controlling for the price of marijuana, we can therefore isolate the causal effect of the MLDA on alcohol county-level alcohol prices are negatively correlated with mari- and marijuana consumption. The identifying assumption is that, juana consumption. Also using data from the NHSDA, Farrelly et al. apart from the ability to legally purchase alcohol, individuals just (1999) find that increases in state-level beer prices are negatively above and just below the age of 21 are similar in all character- correlated with marijuana consumption for youths aged 12–20, but istics that determine substance use. The regression discontinuity not for young adults aged 21–30. approach allows us to estimate the extent of substitution between In summary, the literature on substitution between alcohol alcohol and marijuana and identify the causal effect of changes in and marijuana finds contradicting results. DiNardo and Lemieux the MLDA on individuals close to 21 years of age. (2001) and Chaloupka and Laixuthai (1997) interpret their findings Our results show that alcohol and marijuana are substitutes. At as reflecting substitution between alcohol and marijuana, while age 21, we observe a sharp increase in alcohol consumption but Pacula (1998), Williams et al. (2004), Saffer and Chaloupka (1999) a decrease in marijuana consumption. This suggests that policies and Farrelly et al. (1999) interpret their findings as reflecting com- that restrict access to alcohol cause an increase in marijuana con- plementarity. One possible reason for these mixed results is that sumption. Our estimates suggest that the MLDA at age 21 decreases different studies use different surveys and time periods, which pre- the probability of having consumed alcohol in the past 30 days by vents comparability. Another reason, perhaps more important, is 16% and increases the probability of having consumed marijuana that many of the previous studies are based on state-level (or in the by 10%. Results from instrumental variables suggest an elasticity of case of Williams, 2004, campus-level) variations in prices of alcohol substitution of approximately 0.7 for the probability of use and 0.4 and marijuana and policies governing their consumption. While for the frequency of use (defined as the number of days in which this approach can establish correlations between substance use, a substance was consumed). We further find that the substitution prices and policies, the correlations do not necessarily reflect causal effect is substantially stronger for women than for men. Our results effects, since state-level prices and policies governing alcohol and suggest that by restricting the age at which people can legally pur- marijuana are likely to be correlated with unobserved population chase alcohol, the MLDA causes an increase in the consumption of characteristics that determine alcohol and marijuana consump- illicit drugs, especially by young women. tion (Carpenter and Dobkin, 2009). In this paper, we overcome The next section reviews the existing literature on the MLDA and this problem by exploiting the discontinuous nature of the MLDA, marijuana use. Section 3 describes the empirical strategy in more which creates an abrupt change in individuals’ ability to legally pur- detail. Section 4 presents the data and results, Section 5 shows the chase alcohol at age 21. The empirical approach, known as a regres- robustness of our estimates and Section 6 concludes. sion discontinuity design, is described in detail in the next section. 2. Literature review 3. Empirical strategy Most of the previous literature on substitution between mari- This paper uses a regression discontinuity design (RDD) to juana and alcohol exploits between-state variation in the minimum identify the effect of the legal minimum drinking age on alcohol legal drinking age (MLDA) and marijuana decriminalization dur- and marijuana use. The RDD approach exploits the sharply dis- ing the 1970s and 1980s. DiNardo and Lemieux (2001) estimate continuous nature of the minimum legal drinking age, the fact a structural model of alcohol and marijuana consumption to test that a person cannot legally purchase alcohol up until the day the effect of increases in the MLDA. They analyze state-level per- before her 21st birthday, but can do so from her 21st birthday centages of high school seniors that reported having consumed onwards. Individuals therefore switch from the control regime, alcohol/marijuana from the Monitoring the Future Surveys (MFS) in which they are legally prohibited from buying alcohol, to the during the period 1980–1989. Their find that alcohol and marijuana treatment regime, in which they are allowed to do so, from one are substitutes and that increases in the MLDA lead to a decrease in day to the next.
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