Marijuana and Whoppers: Substitutes or Complements?

Like most goods, economists argue that the demand for marijuana depends on a few key variables: consumer income, prices of substitutes and complements, and expectations about future prices, to name a few. Changes in these variables will result in a shift of the entire demand curve. A change in the price of marijuana itself will not cause the demand curve to shift; rather it will cause a movement along the demand curve. It is an empirical question as to how sensitive demand is to changes in these variables. From a policy point of view, it's important to be able to quantify the relationship between these variables so as to better predict the impact on consumption of changes in, for example, the price of marijuana.

A recent paper by Sara Markowitz and John Tauras examines the consumption of cigarettes, alcohol, and marijuana by teenagers given changes in the prices of other goods that teens typically buy--namely, fast food, clothing, and entertainment. One result that they find:

Higher hamburger prices may reduce the probability and frequency of use of marijuana and the frequency of smoking among drivers.

In other words, hamburgers and pot are substitutes! (Thanks to Marginal Revolution for the pointer.)

Another important consideration is the relationship between the three vices themselves. Is alcohol a substitute or a complement for pot? At least one study argues that they are complements. If so, then policies that raise the price of alcohol (such as alcohol taxes) will not only reduce the consumption of alcohol, but marijuana also. (Just like an increase in the price of peanut butter will reduce the consumption of jelly.)