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Essays on the Economics of Marijuana
Leung, Gregory
Leung, Gregory
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Abstract
As of January 2020, 33 states and the District of Columbia have passed medical marijuana laws (MMLs) while 13 states and the District of Columbia have passed recreational marijuana laws (RMLs). The liberalization policies may have ambiguous impacts on the economy and public health if we account for the additional spending to compensate the negative externalities such as the potential increase in crime, accidents and the overall health of individuals that are associated with the laws. My goal is to fill in the gaps and contribute to the existing literature by providing empirical evidence using econometric techniques. This dissertation addresses three aspects in regard to marijuana liberalization: the potential effects on college students' risky behavioral changes and mental health outcomes, its association with traffic accidents and fatalities, as well as the impact on tax revenues among other recreational drugs such as tobacco and alcohol. The first chapter explores the effect of MMLs on college students' mental health. Given the legal passage of marijuana for medicinal purposes, it reduces the cost for students to consume marijuana since severity of punishment is a cost associated with consumption (Becker, 1968). In addition, Buckner et al. (2007) suggests that young adults tend to be the prominent users of marijuana for recreational purposes. By using the restricted version of the Healthy Mind Study Questionnaires data set that contains the names of higher education institutions, demographic information on students, their academic performances, self-reported mental health conditions as well as their lifestyles and risky behaviors, it allows one to assess whether there is an impact on students' mental health due to the legal and easier access to marijuana. The second chapter highlights the effect of state-level marijuana liberalization, from medical to recreational laws, on traffic fatalities. In 2017, there was an estimation of over 35,000 accidents involving a fatality (National Center for Statistics and Analysis, 2018). The motivation of this chapter is to seek the relationship between marijuana laws and subsequent increased marijuana consumption either alone or in concert with alcohol and traffic safety. The third chapter extends the analysis by determining the impact of city-level cannabis decriminalization on fatal traffic crashes in US cities. Unlike MMLs, which are associated with fewer fatal crashes, cities experienced a relative increase in fatal crashes involving young male drivers following marijuana decriminalization. The fourth chapter focuses on the new source of "sin" taxation for U.S. states with the enactment of recreational marijuana laws. Extensive economic research literature on the optimal taxation of goods and services is used in order to raise government revenue, distort consumer behaviors and provide incentives to guide economic investment and research. In this chapter, we examine the effect of the recent enactment of RMLs on state–level tax revenues on the sales of other “sin” goods, specifically alcohol and tobacco products. Using difference–in–differences design with quarterly state–level tax revenue data for alcohol, tobacco and marijuana (for states which have enacted RMLs) as well as demographics from 2010–2016, this study estimates the fiscal impact of RMLs on aggregate sales of alcohol and tobacco products.
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Date
2020-05-31
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University of Kansas
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Keywords
Economics, Health Economics, Marijuana Laws, Mental Health, Sin Goods, Taxes, Traffic Fatalities