Description:

David Cutler (Harvard): "Why Has the Opioid Epidemic Lasted So Long?" with J. Travis Donahoe

Abstract: Between 1990 and 2021, opioid overdose death rates in the U.S. rose nearly continuously. Such a long period of sustained increase goes against conventional theory, which suggests that the public and private policies that respond to harmful drug epidemics should reduce deaths over time. This paper examines why opioid deaths rose so greatly and for so long. We develop and estimate a model of addictive drug use dynamics which incorporates spillovers across people, which we refer to as “thick market externalities.” Thick markets may result from information spillovers across people, changes in the cost of using drugs as more people use them, and positive peer effects in consumption. When goods are addictive and there are spillovers across people, temporary shocks may lead to long-term increases in use. To test for the presence of these spillovers, we estimate our model using data on county opioid overdose death rates linked to geographic distance and peer connectedness, as measured by Facebook friendships. We find evidence of large spillovers in opioid use, particularly through friend relationships but also through geographically close areas. Our estimates imply the majority of opioid deaths in recent years are due to spillovers from historical dissemination of prescription opioids, rather than exogenous factors affecting the present.