Monday, November 3, 2014

The Economics of Marijuana Legalization

So I am trying to claw my way back into more regular blog posts and what better occasion than the midterm elections coming up to do so...or so I thought.  My well-intentioned plan was to try and inject some economics into the ballot measures, but it has been hard to find time to stop and blog.

So in a last gasp effort on the eve of the election I just do a quick drive-by on what economists have learned about the effects of legalizing marijuana.

In a well-cited paper, my former Colleague Dan Rees and his co-authors, Ben Hansen of the U of O and Mark Anderson, find that: "The first full year after coming into effect, [medical marijuana] legalization is associated with an 8–11 percent decrease in traffic fatalities."  The implication is that marijuana is a substitute for alcohol and easing access to marijuana reduces alcohol consumption and related DUI traffic fatalities.

In a newer paper by Wen, Hockenberry and Cummings, released as an NBER working paper, it is found that the implementation of Medical Marijuana Laws (MML): "increases marijuana use mainly among those over 21, where there is also a spillover effect of increased binge drinking, but there is no evidence of spillovers to other substance use.

Finally, Anderson, Hansen and Rees are back at it with this paper that suggests that the: "results are not consistent with the hypothesis that legalization leads to increased use of marijuana by teenagers." Again, they are talking about medical marijuana.

Recreational legalization is still so new we don't have any good studies yet that I am aware of.  So the takeaway.  It appears that marijuana use by adults increases with medical marijuana legalization but it is not clear whether it it is a substitute or complement to alcohol.  It does not appear to increase teenage use nor lead to the abuse of other substances.

Do with this info what you will.

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