Job Market Paper:
Illegal Drug Use and Government Policy: Evidence from a Darknet Marketplace, October 2023
with Priyanka Goonetilleke, Artem Kuriksha, and Peter Meylakhs
Abstract: This paper develops a structural model of demand for illegal drugs varieties and studies how consumers substitute between different types of drugs in response to government policies. We use a unique longitudinal dataset on prices, quantities, and individual decisions that we obtained by scraping a darknet marketplace that covered the majority of the retail illegal drug trade in Russia. Our estimation procedure exploits a novel set of micro-level moment conditions to identify correlations in preferences for specific drug types and the degree of attachment to them. We find that the median own-price elasticity of demand for illegal drugs is -3.6, and that there is high substitution within two classes of drugs: medium-risk stimulants and cannabis. We validate our estimates using exogenous variation in the price of hashish caused by increased policing. The estimated model is used to evaluate counterfactual drug policies. We find that the legalization of cannabis has the benefit of decreasing the use of riskier drugs while increasing cannabis use. For every 4 additional doses of cannabis consumed, 1 less dose of another drug is consumed. Our estimates show that the recent introduction of a new family of synthetic drugs has increased total drug demand in the country by 40%, suggesting that governments should allocate resources to prevent the introduction of new drug products. Finally, our model helps identify the optimal drugs to target for interdiction, specifically those without close substitutes, such as α-PVP.
Hospital Quality and Patient Choice: Evidence from “Hospital Compare” reports, Draft coming soon
Abstract: High variation in hospital quality translates into substantial differences in survival and other health outcomes between patients admitted to high and low-quality hospitals. This paper examines whether the ``Hospital Compare'' public reports on hospital quality induced reallocation of patients toward hospitals with high reported quality in terms of mortality and unplanned readmissions. In the sample of elderly Medicare patients, the reports publication led to reallocation of non-ambulance admissions with no effect on patients arriving via ambulance, as they have limited choice of hospital. There are several key findings. First, information is more useful when patients have the time and opportunity to make a choice. The effect is the largest for transfer and referral admissions compared to patients coming to the emergency room. Second, the fact that doctors typically guide patient choices in transfer and referral admissions implies that doctors and patient surrogates are more responsive to information about hospital quality than the patients themselves. This is further implied by the greater effect for patients with dementia, who often rely on others for decision-making, compared to other elderly patients. Finally, quality reports are most valuable when patients have more options of nearby hospitals: the effect of quality reports is concentrated in the most urbanized markets.