Working Paper

The Downward Spiral

Abstract: To analyze the opioid epidemic, we construct a model where individuals, with and without pain, choose whether to misuse opioids knowing the probabilities of addiction and dying. These odds are functions of opioid use. Markov chains are estimated from the US data for the college and non–college educated that summarize the transitions into and out of opioid addiction as well as to a deadly overdose. We construct a structural model that matches the estimated Markov chains. We also examine the epidemic’s drivers and the impact of medical interventions.

Keywords: addiction; college/non–college educated; deaths; fentanyl; Markov chain; medical interventions; opioids; OxyContin; pain; prices; structural model;

JEL Classification: D11; D12; E13; I12; I31; J11; J17;

Status: Published in 2022

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Bibliographic Information

Provider: Federal Reserve Bank of Atlanta

Part of Series: FRB Atlanta Working Paper

Publication Date: 2022-02-25

Number: 2022-4

Note: Francesco Chiocchio, Michele Federle, and Jordan Herring provided excellent research assistance. This working paper is a preliminary version of the research. The views expressed here are those of the authors and not necessarily those of the Federal Reserve Bank of Atlanta or the Federal Reserve System. Any remaining errors are the authors' responsibility.