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The Price Elasticity of Heroin

A new study has some interesting things to say about the demand curve of heroin users. Drawing data from volunteers who use the drug daily, researchers Juliette Roddy, Caren Steinmiller, and Mark Greenwald tested three parameters: an income shock; removing the financial support of family and friends; and multiplying the the risk of getting caught. They found that income reduction had some effect: as income decreases, those who purchase a lot of heroin scaled back more than those who bought a little. When government subsidies were removed, participants also attested that they would buy less. They also found that participants with cocaine in their urine were more efficient drug buyers – this subgroup lowered transaction costs by shaving both distance (making sure they lived close to a drug dealer) and time in their purchases. They found that the more frequent the user, the most cost-effective they are about their heroin purchases, with those who also use cocaine being the most effective shoppers.