Joints and More: Bundle Choices, Complementarities and Dynamics among Sin Goods

Résumé

As illicit substances move into legal product space, substitution patterns with legal products become more salient. In particular, marijuana legalization may have implications for use of other "sin" goods, such as alcohol and cigarettes. We focus on a young person's choice to consume marijuana, alcohol or cigarettes (and possible combinations) within a dynamic framework of multi-substance use. Specifically, we estimate a structural model of multi-product use of illegal and legal substances that allows for persistence in use, incorporates complementarities, and controls for the limited access to illicit products. We take the model to data from the Monitoring the Future data set which has information on youth consumption. We find that marijuana, alcohol, and cigarettes are complements in consumption. And that, not surprisingly, individuals are sensitive to price changes. These two findings combined indicate that prices of alternative products have the potential to reduce marijuana consumption among the youth. Our results inform the policy debate regarding the impact of marijuana legalization on the long-term use of sin goods.