Despair Deaths?

An Examination of Local Economic Conditions, Race, and the

Drug Mortality Crisis in the United States from 2003 to 2014.

Daniel B. Firoozi
Undergraduate Student, UC San Diego
Revised: March 2017

ABSTRACT
This paper uses panel data and a difference-in-differences model to analyze local economic
conditions and the racial composition of US counties and states in relation to variation in age-
adjusted drug overdose mortality rates per 100,000 residents. Geographic and year fixed
effects are included, and the model is structured so as to prioritize analysis of variation over
time, rather than variation between panels. Drug overdose mortality rates are demonstrated to
be countercyclical relative to median household income, the unemployment rate, and the
poverty rate at the county-level. A rise in the share of African Americans, Hispanics, and Asian
Americans as a percentage of the population at the county-level corresponds with fewer fatal
overdoses. At the state-level, a 1 percentage point increase in the unemployment rate is
associated with 0.2 more annual overdose deaths per 100,000 residents, and a 1 percentage
point increase in the health insurance coverage rate from the ACA corresponds to a 3.9%
decrease in the per capita rate of overdose deaths. Likewise, a weak instrument legalization of
medical marijuana at the state-level is associated with an increase in annual non-marijuana
drug overdose fatalities, but the relationship is not casual. Evidence on “Good Samaritan” laws
and naloxone access laws are mixed, with the former appearing in most specifications to be
negatively associated with overdoses. The relationship between population growth of a county
and its age-adjusted drug overdose fatality rate evolves over the course of the period of the
Great Recession of 2007-2009 from significantly positive to significantly negative.

Acknowledgements
Special thanks to Professors Kate Antonovics, Julian Betts, and Ross Starr for ideas, advice, and
guidance while working on this paper.

 I. Introduction

Since the turn of the 21st Century, the age-adjusted drug mortality rate has more than

doubled in the United States, including a tripling of deaths from opioid-related overdoses (Rudd,

Aleshire, Zibbell, & Gladden, 2016). Nearly half a million Americans died from drug overdoses

between 2000 and 2014, including 47,000 in 2014 alone1. Lethal drug overdoses have now

overtaken vehicle crashes as a leading cause of death and kill four times as many Americans

every year as homicides1 (FBI, 2014). Opioids, a broad classification of pain-relief drugs

including heroin, fentanyl, morphine, hydrocodone, and oxycodone, are responsible for upwards

of 60% of overdose mortality, with cocaine and benzodiazepines responsible for a large share of

the remaining deaths1. A recent paper by Christopher Ruhm (2016) suggests that several factors

in reporting may be resulting in a significant undercount of opioid-related deaths on US death

certificates. Moreover, the spike in mortality rates from opioids is tied strongly to rates of abuse

and dependence on the same drugs, suggesting that the overdose deaths are acting as a proxy of a

broader growth in drug consumption (Jones, Logan, Gladden, & Bohm, 2015). The balance of

evidence confirms that a disproportionate share of Americans living with drug abuse disorders,

particularly with respect to heroin and cocaine, were previously prescribed opioids, but only a

small fraction of the total population that uses pain relievers goes on to initiate heroin use2

(Cicero, Ellis, Surratt, & Kurtz, 2014; Muhuri, Gfroerer, & Davies, 2013). The demographic

breakdown of the crisis has undergone significant shifts as well; drug use is trending toward rural

areas and 90% of new unprescribed opioid use observed among white Americans 3.

1 Rudd, Aleshire, Zibbell, & Gladden (2016)

2 Jones, Logan, Gladden, & Bohm (2015)
3 Cicero, Ellis, Surratt, & Kurtz (2014)

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 Despite the significance of this topic to public health policymakers, the recency of

climbing rates of drug mortality has resulted in a dearth of both data and research, particularly in

the interaction between economic conditions and the use of drugs like opioids, cocaine, and

benzodiazepines. Understanding the influence of local economic conditions such as income,

employment, and poverty on drug consumption is critical to developing policies that will put

downward pressure on drug addiction and mortality in the long run. Because the literature is

understandably thin, it is first helpful to analyze research on the impact of the business cycle on

three related subjects: (1) suicide, (2) alcohol consumption, and (3) tobacco consumption.

Although about three quarters of drug mortality appears to be attributable to unintentional

overdoses, a substantial share stems from suicide (CDC, 2015). Similarly, the psychological

pathways that posit drug use as a reaction to economic shocks would likely be related to the

mechanisms linking economic conditions with suicide. There is a substantial degree of consensus

between several papers testing suicide rates against unemployment data, which argue that

increases in long-term unemployment and sudden mass-layoffs can increase the rate of suicide

(Ruhm, 2000; Classen & Dunn, 2012; Snipes, Cunha, & Hemley, 2012). When decomposing

these findings by gender and region, the results diverge somewhat by demographic subgroup.

While Yang (1992) demonstrates that the pattern between unemployment and suicide only holds

for white males in the raw data, her controls for sociological conditions yield a result that

parallels the work of Classen and Dunn (2012), suggesting that American males as well as

females experience an increase in the probability of suicide resulting from an increase in state-

level unemployment. Snipes, Cunha, and Hemley (2012) point to variations in the suicide rates’

responsiveness to unemployment by geographic region in the United States, but it is difficult to

3
posit intuitive reasoning for the differences and virtually no parallel work to either confirm or

reject the finding.

Drug abuse may also share properties with alcohol use, particularly in the extent to which

consumption of both may be subject to swings in consumers’ disposable income and each

product may be used to relieve stress. There is a broadly accepted pattern of pro-cyclical alcohol

consumption in OECD countries reflected in the data for liver disease mortality (Ruhm, 2000;

Ruhm, 2006), the frequency of drinking (Dee, 2001; Ruhm & Black, 2002), self-reported drunk

driving (Ruhm & Black, 2002), and household demand for packaged alcohol (Cotti, Dunn, &

Tefft, 2014). Yet, when the literature narrows in focus to instances of binge drinking, gauged

through survey data, studies demonstrate that the phenomenon is countercyclical with respect to

unemployment and diametrically opposed to alcohol consumption as a whole, particularly for

African American males (Bor, Basu, Coutts, McKee, & Stuckler, 2013; Davalos, Fang, &

French, 2012; Pacula, 2011). There are a few counterexamples, like a paper testing employment

rates against binge drinking by Tekin, McClellan, & Minyard (2013), which find statistically

insignificant results or point estimates too low to be of value, but they tend to represent a

minority view within the field. Furthermore, when Pacula (2011) examines a series of nine

papers on the topic, she notes that most results in developed countries with high disposable

income distinguish between heavy drinkers, who consume significantly less alcohol in

downturns, and light drinkers, who tend to drink slightly more as the economy falters. As she

further notes, a key implication for analyzing the cyclicality of drug abuse is that researchers

must include data on the differential response rates to economic conditions across the

demographic spectrum. While findings on the pro-cyclicality of total alcohol consumption and

the counter-cyclicality of binge drinking may offer some insight into the impact of local

4
economic conditions on drug abuse, alcohol’s status as a legal, taxed, and regulated product

weaken the argument that it is directly applicable to the use of illicit drugs like nonprescription

opioids and cocaine.

Tobacco consumption provides, perhaps, the most analogous analytical framework to

drug abuse, because of the addictive properties nicotine shares with opioids. Short-run decreases

in work hours and higher local unemployment rates are associated with declines in individuals’

tobacco consumption (Ruhm, 2000; Ruhm, 2005; Colman & Dave, 2014). Tobacco consumption

mirrors that of alcohol and falls most significantly among heavy smokers, dispelling the notion

that increasingly intense addiction to the product might limit or negate the effects of its income

elasticity4. Colman and Dave (2014) notice the disparate effects of unemployment between men

and women in the Great Recession, with men reducing cigarette consumption by a greater degree

in response to regional unemployment, but they caution against drawing a conclusion in absence

of more evidence given that the industries most severely impacted by the recession, durable

goods manufacturing and construction, employed far more males than females. Because the lag

time on tobacco-related deaths may extend significantly longer than that for overdoses from

drugs5 and knowing that little empirical work has been done on tobacco-related mortality, it

should be understood that the comparison between tobacco consumption and drug mortality is an

inexact but, nonetheless, useful tool for understanding the mechanisms influencing drug

overdoses.

In a larger context, the evidence from suicide, alcohol, and tobacco would appear to point

the results for drug overdose mortality in two different directions, with smoking and total alcohol

4 Ruhm, 2005
5 Note that the term “drugs” in this paper, unless otherwise specified, refers to addictive substances such
as opioids, cocaine, benzodiazepines, hallucinogens, etc. that produce euphoria and may result in death
from overdose. Critically, marijuana and other substances that cannot result in overdose are not include.

5
consumption rising and falling in sync with the business cycle as binge drinking and suicide rates

move in the opposite direction. However, it is possible to reconcile the consensus on these topics

by considering the distinction between the two groups of activities. Extreme health-adverse

activities like suicide and binge drinking represent cases where the psychological mechanisms of

a weak economy dominate, whereas the regular use of legal substances such as alcohol and

cigarettes represent an example where the income elasticity of normal goods proves more

influential. Since drug overdose deaths can be either intentional or unintentional from legally

prescribed or black market sources, a coherent story does not arise from the related literature as

to whether the data should yield results more similar to the extreme health-adverse activities or

the regular use of controlled substances.

II. Theory

The conceptual framework most applicable to drug overdose deaths is the theory of

rational addiction developed by Becker and Murphy (1988). Maintaining that individuals are

equipped with perfect information about a good’s costs as well as utility and that consumers

understand that they will become dependent on an addictive substance, they argue that the choice

to purchase an addictive good is a rational decision to maximize the present discounted value of

utility over the long run. Notwithstanding the controversial assumptions, rational addiction

theory remains the most prominent theory of addiction and provides a variety of useful

implications for studying addictive behavior. The theoretical model’s most important conclusions

maintain “that ‘cold turkey’ is used to end strong addictions, that addicts often go on binges, that

addicts respond more to permanent than to temporary changes in prices of addictive goods, and

that anxiety and tensions can precipitate an addiction” (Becker & Murphy, 1988), which have

some key consequences in the context of addictive drug use and the business cycle. Because it is

6
generally assumed that the price of a given good relative to a consumer’s income can influence

the quantity of the good purchased and that consumer income fluctuates in economic cycles, a

permutation of rational addiction theory might contradict the short-run notion of an income effect

in the case of addictive drugs, contingent on how recessions influence individual’s anxieties and

tensions. For example, assuming that a prospective drug consumer’s mental health deteriorates as

a consequence of a recession, the individual might initiate drug use despite a fall in disposable

income, because the utility from drug use is magnified by economic distress and exceeds the

associated long-run costs of addiction. Thus, the derived results from rational addiction theory

for the question of how economic conditions impact drug consumption hinge on whether or not

potential consumers are psychologically impacted by a downturn such that the utility of

addiction overwhelms the short-run loss of disposable income available for drug purchases6.

There are three core weaknesses stemming from Becker and Murphy’s model that are

worth briefly mentioning. First, the model assumes that because people experiencing substance

abuse disorders are long-run welfare maximizers, they are only likely to quit or reduce

consumption of an addictive good in response to long-term shifts in the prices of the good to

which they are addicted. This may not necessarily be the case if addiction tends to weaken a

consumer’s ability to effectively maximize their long-run utility by weakening their mental

faculties, or if addiction leads the consumer of an addictive substance to increase the discount

rate they apply to long-run outcomes. Second, it assumes that people with substance abuse

disorders are rational actors, or at least as rational as the average consumer in the market. A

growing body of evidence out of medical research, however, suggests that a disproportionately

high share of people with addictions may be suffering from a mental illness (Williams &

6 Once again, this assumes that drugs are normal goods.

7
Ziedonis 2004) and, thus, are not necessarily capable of approaching potential long-run utility

bundles from a purely rational standpoint. Finally, the notion of the “self control problem”, an

inability to carry out optimal strategies for consumption due to short term symptoms like

withdrawal pain, presents a problematic challenge to rational addiction theory’s assumption that

quitting “cold turkey” is a viable option for addicts (Gruber & Koszegi, 2002; Gruber &

Mullainathan, 2002). Although these flaws remain unresolved, Becker and Murphy’s model

remains the most compelling model of addiction, and thus its implications are taken at face value

in this paper.

In a larger sense, researchers have melded the theory of rational addiction and existing

economic literature to illustrate two overarching pathways for local employment, income, and

poverty to affect an individual’s consumption of drugs: psychological and economic. The former,

relying on the assumption that economic shocks can alter psychological perceptions, holds that a

weaker economy necessarily puts upward pressure on the rate of drug use and mortality, whereas

the latter, acting through several dimensions of the business cycle, has either an upward or

downward impact depending on the precise assumptions that are made.

Underneath the psychological pathway exist two distinct concepts: proximity and self-

medication. Arkes (2011) contends that a weakening economy incentivizes a greater number of

people to sell drugs as formerly employed individuals seek to replace lost income, which would

likely expand the accessibility of drugs and increase the fraction of the local population that

know an individual that sells drugs on the black market. Assuming consumers have imperfect

information about the location and quality of the supply of drugs, a rise in the accessibility and

familiarity of black market sellers could assuage concerns about the quality of the product and

make it easier to contact and transact in the local black market without getting caught by law

8
enforcement. This in turn, would mean a greater quantity of drug purchases as both the supply

and demand curve shift outward. By contrast the most prominent rationalization of the link

between economic conditions and drug use, self-medication theory, rests solely on the demand

side of the equation. Building off rational addiction, it logically follows that seeing or

experiencing job loss, the threat of job loss, and the rising demands of paid work during a

recession could spur stress, anxiety, and mental health problems, inducing a greater fraction of

the population to “self-medicate” with drugs that relieve pain or produce euphoria7 (Chalmers &

Ritter, 2011).

Three direct economic mechanisms may variously result in a cyclical or countercyclical

pattern of drug abuse and overdoses, depending on the assumption specifications an individual

researcher is willing to make: net utility, health insurance access, and income effects. The net

utility of activities other than drug use, such as job searches, may decline as the economy

deteriorates, pushing the number of overdoses higher7. Conversely, it is also possible that the

opportunity cost of drug use rises during a downturn, as it becomes more difficult to find

alternative employment and as the lower productivity that may result from drug use makes a

worker more likely to be laid off7. Comparably, the rise in health insurance rates during

recoveries may either lead to a fall in drug overdose mortality as a growing share of the

population can afford rehabilitation programs (Maclean, Cantor, and Pacula, 2015) or an

upswing in mortality as a growing number of people can afford to buy prescription opioids and

subsequently transition to the black market. Finally, there could be either a positive or negative

relationship between real median household income and drug abuse contingent on whether

recreational drugs act as normal or inferior goods, respectively.

7 Arkes (2011)

9
 III. Applied Research

What little applied work has been done on the link between economic conditions and

drug use can be classified into three methodological groups with unique insights and problems:

natural experiments involving youth, questionnaire based research, and natural experiments

involving adults. The methods, findings, and weaknesses of each will be elaborated.

Three papers analyze the impact of state-level unemployment rates on self-reported drug

use in health surveys among American youth. Arkes (2007; 2011) employs data from the

National Longitudinal Survey of Youth in a panel data model and discovers a countercyclical

trend in the previous year cannabis use rate among young people ages 14 to 24 on the order of

roughly 1.4% for each 1 percentage point increase in the state-level unemployment rate.

Interestingly, his results for drugs other than marijuana claim a 1% marginal increase in past year

use for 14 to 19 year olds versus no statistically significant increase for 20 to 24 year olds. Arkes’

data also show no statistically significant racial gaps, conflicting with Pabiliona (2014), whose

work on the Youth Time Risk Survey claims a 1.9% higher likelihood of past month marijuana

use solely for young African American males per percentage point rise in state-level

unemployment. Still, the countercyclical nature of cannabis consumption among youth seems to

be somewhat consistent. The caveat with testing economic conditions among the youth is that

young people, particularly teenagers, are more exposed to recessions and unemployment than

older cohorts, because they are more likely to work in sectors prone to larger cyclical swings,

making the probability of employment more exogenous to their actions relative to adults.

Moreover, they may underestimate or discount the long-run value of their actions relative to the

group of adults who make up the vast majority of people with substance abuse disorders.

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 The second group of papers relies heavily on hypothetical questions posed to a group of

people who self-identify as having histories of drug abuse and suffers from a number of potential

pitfalls in both internal and external validity. After identifying a sample of approximately 100

people with a history of abusing cocaine, heroin, or alcohol, two studies pose a series of

interview questions regarding how potential fluctuations in income would affect a participant’s

consumption of illicit drugs and find that respondents plan rising consumption of illicit drugs as a

share of their income as disposable income rises in several steps (Petry, 2000; Roddy &

Steinmiller, 2011). The information collected from the survey is then used to map respondents’

demand for illicit drugs against the hypothetical income they are assigned in each question to

find the income elasticity of drug demand. Notably, Roddy & Steinmiller (2011) find some

evidence that heroin consumers’ “purchasing repertoire is very cost-effective”, that they live very

close to their black market suppliers, and that only a strong external shock to income or the

probability of arrest may shift consumption preferences. Taken together, the information that

emerges from each paper implies that recreational drugs like cocaine and heroin are subject to a

positive income effect and, consequently, are normal goods. However, the problems of self-

selection bias, incredibly small sample sizes, and the absence of hard data constitute serious

flaws in this methodology and render the data as an extension of anecdotal evidence, rather than

a true representative survey.

Research papers employing cross-sectional, time-series data on adult drug abuse are the

most effective at evaluating the relationship between the economic cycle and drug abuse, but the

existing literature is limited. Ruhm (2013) mentions that the trend for unintentional opioid

overdoses has shifted to become robustly countercyclical in recent years, but the data available

did not allow for demographic controls or decomposition. Chalmers and Ritter (2011), by

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distinction, provide a detailed explanation of their regression of cannabis use on both Australian

state-level income and unemployment, revealing that past year participation in cannabis use

varies counter-cyclically with state-level per capita income. However, the dual drawbacks of

focusing wholly on cannabis, which cannot result in overdose deaths, and the Australian dataset,

which the authors admit spans a time period without a single recession, undermine the external

validity when applying the findings to American drug abuse and mortality. Carpenter, McClellan,

and Rees (2016), acting on information provided by the US National Survey on Drug Use and

Health, are the most successful in employing survey data and describe a pattern of pro-cyclical

LSD use and countercyclical consumption of analgesics and ecstasy. The authors further

establish that the highest rates of drug abuse are among white, working-age males without a

college education, confirming recent reports that highlight this group as the most at risk for drug

overdose mortality. Likewise with previous work, the paper’s dependence on survey data, which

may be prone to asymmetric response bias and social desirability bias, undercuts the reliability

and precision of the point value estimates of the coefficient of unemployment’s impact on drug

abuse. To bypass the weaknesses of survey data, Maclean, Cantor, and Pacula (2015) analyze the

relationship between three measures of unemployment and admissions rates for drug treatment

programs and observe that entrance to substance abuse programs fall as unemployment climbs.

Yet, the intuition remains unclear on whether treatment program membership varies inversely

with drug consumption or is roughly a fixed proportion of the total population with drug abuse

disorders in a given year.

The current paper will seek to build on the existing literature about the cyclicality of drug

abuse and distinguish itself by (1) incorporating county-level data as well as state-level data for a

more accurate reflection of the economic conditions individuals face on a daily basis, (2) testing

12
health insurance coverage rates as a right hand side variable to partially evaluate the affects of

the implementation of the Affordable Care Act and to disentangle the connection between

economic conditions and access to prescription opioid coverage, (3) employing drug overdose

mortality rates as a proxy of drug abuse to overcome the issues innate to survey data, (4)

experimenting with racial composition controls and racial-economic interaction terms, (5) testing

the enactment of state-based drug laws including medical marijuana laws, “Good Samaritan”

laws8, and naloxone access laws9 to see if implementation of such laws relates to drug overdose

mortality, (6) measuring the relationship between county population growth and drug overdose

deaths, (7) utilizing lagged unemployment to test for the statistical significance of the duration of

economic malaise on overdose mortality, and (8) using alternate measures of economic

wellbeing to supplement unemployment data including the poverty rates and real median

household income.

IV. Data

The data used for this paper is primarily publicly available from four divisions of the US

federal government: the Census Bureau, the Centers for Disease Control, the Bureau of Labor

Statistics, and the St. Louis Federal Reserve. Each public institution provides some of the most

reliable data in their respective field, along with a bevy of statistics available for public use.

Observations from each dataset were matched to one another by Federal Information Processing

Service (FIPS) code and data year, creating a strongly balanced panel for state-level data and a

strongly balanced panel for county-level data, with a few exceptions. For the purposes of this

8 “Good Samaritan” laws, in this case, are laws that provide legal protections for people who intervene to
rescue someone at imminent risk of death from a drug overdose.
9 Naloxone is an emergency treatment medication for opioid drug overdoses that can prevent an overdose
from being fatal. Naloxone access laws are laws that make the medication more readily available or
accessible to either civilians or emergency response personnel.

13
analysis, parishes and independent cities were treated as effectively the same as counties.

Alaska’s geographic subdivisions were excluded due to frequent border changes and

reorganizations, meaning that the county-level data represent the results from 49 states and the

District of Columbia. The state-level data, by contrast, include all 50 states and exclude the

District of Columbia. There is no intuitive reason to believe that this difference will

fundamentally alter the results of the regression. Only two counties outside of Alaska were

excluded from the dataset for all years, both due to abnormal circumstances. Kalawao County,

Hawaii (FIPS code: 15005) is omitted due to lack of data and its unusual demographics as a

sparsely populated former quarantine zone for people with leprosy. Likewise, the independent

city of Bedford City, Virginia (FIPS code: 51515) is omitted, because of its loss of independent

status during the timeframe and its incorporation within Bedford County. In total, 3,112 counties

are included in the finalized dataset with observations from the 12 year-long timespan of 2003 to

2014. In total, less than 1% of county observations are excluded from the sample.

The Centers for Disease Control’s data on age-adjusted drug poisoning mortality is

estimated from the cause of death listed on US death certificates and is available for every county

and state annually throughout the aforementioned time period. At both aggregation levels, the

values are roughly normally distributed. The age adjusted overdose death rate is used rather than

the crude overdose death rate, because the age distribution of a locale may jointly determine

economic wellbeing and crude overdose deaths, resulting in omitted variable bias. Each

observation came paired with population by year in the county-level dataset, specifically.

Critically, the county-level and state-level data differ in the method of expressing drug overdose

mortality rates. For states, the CDC lists the precise value of the drug overdose mortality rate,

whereas only an estimated range is provided for each county. Moreover, at the county-level, drug

14
overdose mortality rates are sorted into 11 bins from 0 to 2 deaths per 100,000 residents per year

to 20+ deaths per 100,000 residents per year, making the county-level value a discrete dependent

variable.

The US Census Bureau’s Small Area Income and Poverty Estimates (SAIPE) Report

offers poverty rates and nominal median household income values for every state and county

running for the full timespan. The nominal median household income values were then adjusted

for the Consumer Price Index level, retrieved from the St. Louis Federal Reserve website, and

baselined to 2014 US dollars to generate real median household income. In addition to poverty

and income data, the US Census Bureau’s Current Population Survey (CPS) takes an annual

sample of the population in each state and county to create intercensal estimates of racial

composition, which were pulled and included for all years at the state-level and the period

2003-2010, or two thirds of the sample, at the county-level.

The Bureau of Labor Statistics’ offers several statistics describing the vital indicators of

the local labor force. The Local Area Unemployment Statistics (LAUS) Program provides

information on total employment, labor force participants, and the unemployment rate for every

county with the exception of 7 Louisiana parishes in the immediate aftermath of Hurricane

Katrina, 2005-2006. At the state-level, the LAUS program offers, in addition to the overall

unemployment rate, the unemployment rate for all sufficiently large racial and gender groups.

Health insurance coverage rates for both states and counties were pulled from the Census

Bureau’s Small Area Health Insurance Estimate (SAIHE) Report for the years 2006 to 2014, the

last three quarters of the timespan of this paper. Critically, this data overlaps with the beginning

of the implementation of the Affordable Care Act (ACA), which spanned 2011 to 2014 and

extended health insurance coverage and guaranteed benefits for drug rehabilitation programs.

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Information on health insurance coverage rates were available for all states and counties for the

aforementioned time period.

Data on state-level drug laws were acquired through the National Organization to Reform

Marijuana Laws (NORML), an organization centered around the advocacy of liberalizing drug

laws. Although the organization takes a clear stance on the issue, all data on years of enactment

and implementation of key drugs laws were corroborated via external links to state government

websites and relevant legislation. The data, however, act as a weak proxy for legalization,

because they have little relation to the opening of dispensaries or the accessibility of cannabis.

Appendix Table A lists all relevant information on medical marijuana laws by state and district.

“Good Samaritan” law and naloxone access law enactment and implementation

information were acquired directly from a recent working paper (Rees, Sabia, Argys, Latshaw, &

Dave, 2017). Appendix Tables B and C are pulled directly from corresponding tables in the

working paper so as to leverage the data in this paper for a replication study.

Descriptive statistics for each dataset are available in Appendix Tables D and E.

V. Econometric Empirical Model

Based on the data available, the econometric model best equipped to gauge the

relationship between local economic conditions, race, and drug overdose mortality is an OLS

regression with locality and year fixed effects as well as standard errors clustered by locale.

Standard errors are clustered at the locale level (state or county for the state-level and county-

level regressions, respectively), because measurement errors in death certificates are likely to be

related by county over time, meaning that standard errors are likely to be correlated by locale

over time. Because this is a natural experiment using panel data, controlling for time trends and

the unobserved qualities that differ from state to state or county to county is essential to isolating

16
the difference-in-difference estimators for the association between the right hand side variables

and drug overdose mortality rates. Each of the regressions on state and county data will have the

following general form:

(1) OD Ratei,y = α + β yy + γci + δei,y + ζri,y + ηxi,y + θsi,y + λli,y + εi,y

The overdose death rate is presented as a function of a constant (α), a vector of dummy

variables for each of 12 years (yy), a vector of dummy variables for each county FIPS code (ci), a

vector of continuous local economic wellbeing variables (ei,y), a vector of continuous local racial

composition variables (ri,y), a vector socio-economic interaction term(s) (xi,y), a vector of social

variables (si,y), a vector of dummy variables for enactment of relevant state-wide drug laws (li,y),

and an error term (εi,y).

In this model, the deviation in a right hand side variable for a state or county relative to

the state or county’s mean value of that variable over the given timespan is taken relative to the

deviation of the average state or county from its mean value over the given timespan. Thus, the

regression measures the impact of a marginal change in a right hand side variable relative to the

national deviation from the national long-term mean. Because of the structure of the regression,

the model works to measure the impact the right hand side variables have in a fixed geographic

area as they vary over time, rather than attempting to explain the differences between geographic

areas. This approach is justifiable because baselining the geographies to their respective means

and regressing the variation relative to the mean accounts for the many unobservable

characteristics that vary between the geographies and may affect overdose mortality, but are

likely to remain fixed or nearly constant over time. While this approach soaks up a significant

degree of the variation in the data, it avoids the possibility of Simpson’s Paradox and helps

17
effectively identify the coefficient on a change in the right hand side variables being tested,

rather than capturing the impact of unobserved differences between geographies, exogenous time

shocks, or national time trends.

VI. Results

Prior to testing various regressions based on the general form model, the correlations

between right hand side variables must be considered. Variables highly correlated with one

another should not be included in the same regression, so as to avoid the problem of

multicollinearity. Thus, two correlation tables are appended below for each dataset, with dashed

lines denoting the separate groups of economic variables, demographic variables, interaction

terms, and state-based drug laws.

Table 3: Correlations between County-Level Right Hand Side Variables

pov rinc inc insure u_rate white black hisp asian ln_pop marij NAL GSL

pov 1

rinc -0.7549 1

inc -0.7019 0.9730 1

insure -0.4106 0.3940 0.3932 1

u_rate 0.4308 -0.2932 -0.2134 -0.0316 1

white -0.5127 0.1497 0.1354 0.4143 -0.1962 1

black 0.4533 -0.2105 -0.2039 -0.1036 0.2386 -0.5926 1

hisp 0.1687 -0.0076 0.0026 -0.4970 0.0134 -0.6454 -0.1058 1

asian -0.1666 0.4358 0.4328 0.1319 -0.0465 -0.2504 0.0224 0.1491 1

ln_pop -0.1683 0.4698 0.4576 0.2939 0.0896 -0.2000 0.1389 0.0902 0.4718 1

marij -0.0513 0.0993 0.1109 -0.0910 0.1050 -0.0452 -0.1708 0.1713 0.2149 0.0508 1

NAL -0.0371 0.1284 0.1377 0.0200 0.1414 -0.1051 -0.0419 0.1506 0.2467 0.1524 0.2566 1

GSL 0.0562 -0.0392 -0.0332 -0.0910 0.0048 -0.1431 -0.0423 0.2304 -0.0081 -0.0092 0.2205 -0.0095 1

Note: Correlations with an absolute value greater than 0.500 are bolded.

18
 Table 4: Correlations between State-Level Right Hand Side Variables
pov rinc inc ln_inc insure u_rate wu wmu white black hisp marij NAL GSL

pov 1

rinc -0.7532 1

inc -0.5603 0.9026 1

ln_inc -0.5700 0.8968 0.9948 1

insure -0.4831 0.4193 0.4609 0.4667 1

u_rate 0.4720 -0.1607 0.0110 0.0102 -0.2179 1

wu 0.2997 -0.1077 0.0546 0.0620 -0.2099 0.9236 1

wmu 0.2471 -0.0912 0.0602 0.0678 -0.1632 0.9013 0.9339 1

white -0.2795 -0.2258 -0.2449 -0.2302 0.2516 -0.2114 -0.0728 -0.0043 1

black 0.4329 -0.0761 -0.0698 -0.0938 -0.0808 0.2426 -0.0828 -0.1197 -0.4725 1

hisp 0.1593 0.1413 0.1662 0.1789 -0.4389 0.1536 0.2236 0.1665 -0.5939 -0.1187 1

marij -0.0930 0.2432 0.2929 0.2976 -0.0082 0.1623 0.2537 0.2461 -0.1974 -0.2994 0.2620 1

NAL -0.0740 0.2563 0.2563 0.3204 0.1737 0.1190 0.1463 0.1191 -0.1292 -0.0326 0.1972 0.2207 1

GSL 0.0924 0.0800 0.1666 0.1622 0.0648 0.0640 0.0775 0.0626 -0.1969 -0.0539 0.3262 0.3085 0.5188 1

Note: Correlations with an absolute value greater than 0.500 are bolded.

Because the racial and ethnic minority group variables are not particularly strongly

correlated with one another but could result in near perfect multicollinearity if all are included in

the same regression, separate regressions are run for whites and major racial/ethnic minority

groups. That the overall unemployment rate is closely tied to the unemployment rate for white

Americans and white males at the state-level forecloses the possibility of including these terms in

the same model. Consequently, it is necessary to delineate a methodical way of constructing a

model with variables that both satisfy an intuitive understanding of the issue of drug overdose

mortality and avoid the problem of multicollinearity.

19
 The two datasets for counties and states will be tested separately, with three different left

hand side variables regressed over a series of several models. For county-level data the left hand

side variable to be regressed will be the discrete bin value of drug overdose mortality. Each

county for each year is assigned a value ranging from 1 to 11, with one representing a range of 0

to 2 overdose deaths per 100,000 residents and 11 representing more than 20 overdose deaths for

the same population. The two state-level left hand side variables for overdose mortality will be

the age adjusted drug overdose rate per 100,000 residents and the natural logarithm of the same

value. For each left hand side variable there will be a regression on each of the economic

variables and interaction terms alone as well as a multiple regression for each of the

demographic groups and the unemployment rate. Additional models will include variables such

as the natural logarithm of population, drug laws, and health insurance coverage.

Beginning with the county-level dataset, the drug overdose mortality bin is regressed on

the poverty rate, real median household income in 2014 dollars, nominal median household

income, and the unemployment rate. Then the unemployment rate is tested jointly in series of

combinations with various drug laws, population size, and the share of the county population that

is non-hispanic white, non-hispanic black, hispanic, and non-hispanic asian. Results are listed

below in Tables 5a and 5b. Table 5c then presents various models incorporating health insurance

coverage over a more limited timespan of 2006 to 2014. Table 5d concludes with models

accounting for the lagged time effects of unemployment.


20
 Table 5a: County Fixed Effects Model of Drug Overdose Mortality (2003-2014)
Variable 1 2 3 4 5 6

3.305*** 3.822*** 4.383*** 3.336*** 10.110*** 3.331***

constant
(60.50) (22.64) (32.53) (86.88) (4.12) (87.09)

0.016***
pov
(3.95)

-0.006*
rinc
(-1.83)

-0.023***
inc
(-6.55)

0.030*** 0.031*** 0.030***

u_rate
(4.91) (5.05) (4.81)

-0.661***
ln_pop
(-2.76)

0.113**
marijuana
(2.29)

0.057
NAL
(1.48)

-0.103**
GSL
(-2.18)

Sample Size 37,344 37,344 37,344 37,330 37,330 37,330

R2 Within 0.809 0.809 0.810 0.810 0.810 0.810

R2 Between 0.037 0.019 0.020 0.122 0.068 0.126

R2 Overall 0.227 0.223 0.231 0.231 0.055 0.234

Note: The t-statistic for each point estimate is included in parentheses below the numeric value of the coefficient.
The symbols of *, **, and *** signal statistical significance at the 90%, 95%, and 99% confidence intervals,
respectively. Dummy variables for year and county are excluded from the table.

21
 Table 5b: County Fixed Effects Model of Drug Overdose Mortality (2003-2010)
Variable 7 8 9 10 11 12

-0.110 4.015*** -4.447*** 3.994*** -8.077*** -4.837***

constant
(-0.20) (33.01) (-2.18) (32.92) (-3.57) (-2.37)

0.032*** 0.033*** 0.031*** 0.033*** 0.030*** 0.030***

u_rate
(6.81) (7.00) (6.66) (6.84) (6.51) (6.47)

0.042*** 0.049***
white
(6.33) (7.15)

-0.039*** -0.043*** -0.039*** -0.043***

black
(-3.55) (-4.01) (-3.57) (-4.06)

-0.027*** -0.037*** -0.025*** -0.036***

hisp
(-2.80) (-3.76) (-2.63) (-3.62)

-0.177*** -0.202*** -0.175*** -0.199***

asian
(-6.22) (-6.83) (-6.14) (-6.78)

0.839*** 0.726*** 0.876***

ln_pop
(4.17) (3.61) (4.36)

0.147*** 0.161***
marijuana
(2.89) (3.16)

Sample Size 24,882 24,882 24,882 24,882 24,882 24,882

R2 Within 0.748 0.748 0.749 0.749 0.748 0.749

R2 Between 0.008 0.008 0.153 0.010 0.113 0.160

R2 Overall 0.077 0.081 0.228 0.085 0.186 0.232

Note: The t-statistic for each point estimate is included in parentheses below the numeric value of the coefficient.
The symbols of *, **, and *** signal statistical significance at the 90%, 95%, and 99% confidence intervals,
respectively. Dummy variables for year and county are excluded from the table.

22
 Table 5c: County Fixed Effects Model of Drug Overdose Mortality (2006-2014)
Variable 13 14 15 16 17 18

4.849*** 4.947*** 5.104*** 4.654*** 4.890*** 4.605***

constant
(14.56) (13.95) (14.83) (14.12) (15.06) (13.96)

0.001
pov
(0.43)

-0.001
rinc
(-0.66)

-0.010***
inc
(-4.32)

0.016*** 0.016***
u_rate
(4.91) (3.18)

-0.005 -0.005 -0.003 -0.004 -0.006 -0.003

insure
(-1.52) (-1.49) (-0.88) (-1.09) (-1.57) (-0.95)

0.021
marijuana
(0.49)

0.045
NAL
(1.40)

-0.109***
GSL
(-2.89)

Sample Size 28,008 28,008 28,008 28,008 28,008 28,008

R2 Within 0.781 0.781 0.782 0.782 0.781 0.782

R2 Between 0.018 0.022 0.028 0.118 0.009 0.111

R2 Overall 0.143 0.144 0.152 0.150 0.142 0.150

Note: The t-statistic for each point estimate is included in parentheses below the numeric value of the coefficient.
The symbols of *, **, and *** signal statistical significance at the 90%, 95%, and 99% confidence intervals,
respectively. Dummy variables for year and county are excluded from the table.

23
 Table 5d: County Fixed Effects Model of Drug Overdose Mortality with Lags
Variable 19 20 21 22 23

3.618*** 3.911*** 4.258*** 3.913*** 4.251***

constant
(85.21) (81.42) (79.84) (84.67) (84.42)

0.020*** 0.015*** 0.013***

u_rate
(4.19) (3.36) (2.80)

0.010* 0.006* 0.002

lag1u
(1.88) (1.79) (0.50)

0.006* 0.011***
lag2u
(1.19) (3.01)

-0.003
lag3u
(-0.64)

0.028***
rollavg3u
(3.55)

0.023**
rollavg4u
(2.56)

Sample Size 34,211 31,902 27,980 31,902 27,980

R2 Within 0.803 0.794 0.782 0.794 0.782

R2 Between 0.121 0.112 0.105 0.110 0.100

R2 Overall 0.206 0.181 0.153 0.180 0.152

Note: The t-statistic for each point estimate is included in parentheses below the numeric value of the coefficient.
The symbols of *, **, and *** signal statistical significance at the 90%, 95%, and 99% confidence intervals,
respectively. Dummy variables for year and county are excluded from the table.

Because the county-level data set has a dramatically larger sample size than the state-

level data and much greater variation within each variable, it is better able to identify statistically

significant results for the coefficients on each of the righthand side variables. Moreover, if one of

the operating assumptions of the paper, that individuals are more likely to experience economic

conditions reflected by the statistics of their county than the statistics of their state, the results

should be stronger for the county-level data set. The findings from the first four models

demonstrate that drug overdose mortality is strongly countercyclical. At a 99% confidence

interval it can be stated that fatal drug overdoses vary directly with the poverty rate, nominal

24
household income, and the unemployment rate. Congruously, rising real median household

income is associated with a falling drug overdose mortality rate at a 90% confidence interval.

Table 5b offers intriguing new findings on drug addiction, but this evidence is tempered

against inconsistencies over the time period. More specifically, Table 5b includes racial

coefficients from racial data that was only available at the county-level from 2003 to 2010 and,

therefore, tests a different set of observations than Table 5a. While the relationship between

unemployment and drug overdoses remains virtually unchanged between the 2003 to 2010 and

2010 to 2014 period, the relationship between population growth and overdoses does not. The

results suggest that the counties facing the brunt of overdose mortality experienced above

average population growth during the growth period of 2003 to 2007 and experienced subpar

population growth during the 2010 to 2014 post-Great Recession period. This conclusion can be

drawn from the observation that when a regression identical to that of model 5 in Table 5a is run

over the restricted time span of 2003 to 2010 used in Table 5b, the coefficient on the natural

logarithm of population is virtually identical to the coefficient on the natural logarithm of

population in models 9 and 11. These findings on population are accompanied by fascinating

revelations on the relationship between drugs laws and overdose mortality in both Table 5a and

Table 5b. Curiously, the weak proxy of marijuana legalization is positively associated with

overdoses from drugs other than marijuana in models in both tables, whereas naloxone access

laws (NALs) had no statistically significant impact, and “Good Samaritan” laws (GSLs)

corresponded to a significant decrease in per capita fatal overdoses. The results for the latter two

laws were the reverse of those found by Rees, Sabia, Argys, Latshaw, and Dave (2017), who

discovered a statistically significant reductions in overdose mortality from NALs and statistically

insignificant reductions from GSLs.

25
 Models 7-12 further confirm what existing literature has found about the racial fault lines

of the drug addiction crisis. The more rapid the growth in the share of the county population that

is non-hispanic white and the lower the share of the population that is either non-hispanic black,

non-hispanic Asian American, or hispanic, the higher the rate of drug poisoning deaths. In each

of the joint racial-economic models the economic variable and demographic variable are

statistically significant at the 99% confidence interval.

Table 5c begins to explore a series of models which account for the impact of health

insurance coverage on overdose rates. During the time period 2006 to 2014 the most substantial

shifts in coverage rates stemmed from the implementation of the ACA and the accompanying

Medicaid expansion. The newfound insurance coverage for prescription opioids and drug

rehabilitation represent conflicting pressures upward and downward, respectively, on the rate of

drug poisoning deaths. However, at the county-level none of the regression coefficients on health

insurance coverage are statistically significant. Controlling for health insurance coverage did

seem to render the effect of medical marijuana laws statistically insignificant, suggesting that the

results for medical marijuana legalization were spurious. This is potentially the case if state

governments with an ideological predisposition to enact medical marijuana laws also have a

preference for accepting funding for the Medicaid expansion.

Finally, Table 5d illustrates a set of regressions testing various lagged economic variables

and rolling averages to identify whether or not a longer duration of elevated unemployment

places upward pressure on overdose mortality. Statistically significant results for longer lag times

would be consistent with the media portrayal of such fatalities as “despair deaths”, because local

economic conditions presumably would have to remain noticeably dismal for an extended period

of time for conditions like depression to set in. As Models 19, 20, 22, and 23 demonstrate, there

26
is some merit to the idea, given that one year lagged unemployment has a positive significant

impact on per capita mortality, and given that three and four year rolling averages have roughly

as strong predictive power as same-year unemployment.

Taken together, the observations from county-level data provide a solid reflection of the

economic conditions an individual may face and a clear indication of the sign of the coefficient

of the relationship between right hand side variables and overdose deaths. However, the benefits

of a greater ability to identify statistically significant results are counterbalanced by the key

disadvantage that the point estimate for each beta coefficient does not have a direct, meaningful

interpretation. The knowledge that each beta represents the change in expected drug mortality

bin contingent on a 1 unit increase of the right hand side variable must, therefore, be

supplemented with data that can convey whether or not the results are significant in a policy

sense, and not merely a statistical sense.

The state-level drug overdose mortality dataset affords just such an opportunity for

analysis. In the initial seven models in Table 6a we regress a state’s precise drug overdose

mortality rate on five economic variables and two interaction terms: the poverty rate, real

median household income, nominal household income, the natural logarithm of household

income, the unemployment rate, the unemployment rate for white residents, and the

unemployment rate for white male residents. Next, the unemployment rate and nominal median

household income are placed in joint regressions with demographic variables and dummy

variables for state-level drug laws in Table 6b. Table 6c then presents five additional models

controlling for the health insurance coverage rate by state.

27
 Table 6a: State Fixed Effects Model of Drug Overdose Mortality Rate (2003-2014)
Variable 1 2 3 4 5 6 7

7.363** 17.668*** 8.019*** 8.250*** 8.004*** 17.214*** 40.548**

constant
(2.38) (3.32) (13.16) (14.85) (14.40) (4.77) (2.00)

0.162
pov
(0.61)

-0.151
rinc
(-1.61)

0.226**
u_rate
(2.06)

0.212*
wu
(1.82)

0.245**
wmu
(2.39)

-0.183**
inc
(-2.22)

-8.323
ln_inc
(-1.55)

Sample Size 600 600 600 600 600 600 600

R2 Within 0.520 0.526 0.523 0.522 0.525 0.530 0.526

R2 Between 0.092 0.044 0.124 0.203 0.211 0.045 0.051

R2 Overall 0.206 0.191 0.196 0.201 0.212 0.190 0.198

Note: The t-statistic for each point estimate is included in parentheses below the numeric value of the coefficient.
The symbols of *, **, and *** signal statistical significance at the 90%, 95%, and 99% confidence intervals,
respectively. Dummy variables for year and county are excluded from the table.

28
 Table 6b: State Fixed Effects Model of Drug Overdose Mortality Rate (2003-2014)
Variable 8 9 10 11 12

-2.188 9.087*** 8.042*** 16.921*** 7.935***

constant
(-0.27) (3.87) (13.54) (4.66) (13.29)

0.261** 0.266** 0.182* 0.196*

u_rate
(2.30) (2.38) (1.69) (1.83)

-0.182**
inc
(-2.20)

0.133
white
(1.29)

0.018
black
(0.09)

-0.170
hisp
(-1.32)

1.413** 1.511** 1.600*

marijuana
(2.07) (2.15) (1.97)

-0.533
NAL
(-0.83)

-0.504
GSL
(-0.64)

Sample Size 600 600 600 600 600

R2 Within 0.528 0.527 0.531 0.539 0.534

R2 Between 0.002 0.012 0.062 0.080 0.060

R2 Overall 0.100 0.063 0.205 0.224 0.207

Note: The t-statistic for each point estimate is included in parentheses below the numeric value of the coefficient.
The symbols of *, **, and *** signal statistical significance at the 90%, 95%, and 99% confidence intervals,
respectively. Dummy variables for year and county are excluded from the table.

29
 Table 6c: State Fixed Effects Model of Drug Overdose Mortality Rate (2006-2014)
Variable 13 14 15 16 17

53.644*** 51.834*** 52.597*** 55.582*** 54.819***

constant
(6.11) (5.78) (5.76) (6.59) (6.31)

0.141 .058 .058

u_rate
(1.23) (0.53) (0.52)

0.028
inc
(0.22)

-0.499*** -0.485*** -0.503*** -0.532*** -0.524***

insure
(-4.80) (-4.63) (-4.63) (-5.38) (-5.16)

2.690*** 2.936***
marijuana
(3.45) (3.19)

0.285
NAL
(0.43)

-0.735
GSL
(-0.99)

Sample Size 450 450 450 450 450

R2 Within 0.379 0.381 0.379 0.417 0.420

R2 Between 0.087 0.100 0.078 0.102 0.096

R2 Overall 0.139 0.151 0.132 0.153 0.148

Note: The t-statistic for each point estimate is included in parentheses below the numeric value of the coefficient.
The symbols of *, **, and *** signal statistical significance at the 90%, 95%, and 99% confidence intervals,
respectively. Dummy variables for year and county are excluded from the table.

Unsurprisingly, the more limited sample size and variation within the state-level data

result in fewer instances of statistically significant coefficients. Among the economic variables

and interaction terms, only the unemployment rate, nominal household income, the white male

unemployment rate, and the white unemployment rate are statistically significant at the 95%,

95%, 95%, and 90% confidence intervals respectively. For each measure of unemployment, an

increase of 1 percentage point equates to between roughly a 0.15 and 0.25 person increase in

number of fatal drug overdoses per 100,000 residents. Although the coefficients on the poverty

rate and real median household income are not statistically significant at a 90% confidence

30
interval it is notable that the sign of each coefficient is consistent with the findings from the

county-level data. This information coupled with the statistically significant results from two

new racial-economic interaction terms add further evidence to the notion that drug overdose

mortality is countercyclical, and that economic conditions are experienced more strongly at the

local-level than the state-level.

Table 6c offers some interesting insights which may explain patterns in the existing

literature that are inconsistent with medically observed patient demographics. At the state-level,

the coefficients on the non-hispanic white, non-hispanic black, and hispanic share of the

population do not pass the threshold of statistical significance at a 90% confidence interval.

Paired with the fact that the coefficients on the white male, white, and total unemployment rates

do not statistically differ from one another, the evidence suggests that aggregation at a higher

level than county data does not capture enough variation to provide a reliable estimation of the

relationship between race and the drug overdose crisis. This is notable, because virtually all

papers utilizing geography-based panel data to date have exclusively employed state-level data.

However, the state-level results for medical marijuana legalization do at least provide strong

evidence to confirm county-level patterns observed in Table 5a and Table 5b. Specifically, the

enactment of medical marijuana laws at the state-level, during the period 2003-2014, was

associated with an increase in overdose deaths from drugs other than marijuana on the order of

roughly 1.6 deaths per 100,000 residents. Both naloxone access laws and “Good Samaritan” laws

seem to have a negative relationship of approximately 0.5 fewer deaths per 100,000 residents,

but neither is statistically significant.

The final group of regressions in Table 6c reflect, perhaps, the most significant findings

for public health policymakers. At the state-level, increases in health insurance coverage were

31
linked strongly, at the 99% confidence interval, with dramatic reductions in drug overdose

mortality at a rate of 0.5 deaths per 100,000 residents for each 1 percentage point increase in

health insurance coverage. Given that most of the variation in health insurance came during the

ACA’s dramatic expansion of coverage, which occurred during the latter end of the timespan of

the paper, this would seem to suggest that the early phase of the ACA put downward pressure on

the overdose mortality crisis. Whether this trend continued into the later phases of the ACA’s

implementation is unclear, but will be a critical point of future investigations when more recent

data becomes available.

For the final series of models, the natural logarithm of the drug overdose mortality rate is

leveraged as the left-hand side variable to yield beta coefficients that reflect the percentage

change in the overdose mortality rate resulting from a one unit increase in each right hand side

variable. The same approach to generating regression models was taken as in the previous state-

level data models with the addition of the natural logarithm of real median household income

and health insurance coverage as righthand side variables. Results are listed below in Table 7.

32
 Table 7: State Fixed Effects Model of the Natural Log of Drug Overdose Mortality Rate
Variable 1 2 3 4 5 6 7 8 9

1.938*** 2.784*** 4.508*** 2.091*** 5.713*** 2.092*** 2.430*** 2.781*** 2.793***

constant
(8.93) (6.53) (2.66) (35.63) (9.36) (42.17) (3.65) (6.01) (6.74)

0.017
pov
(0.95)

-0.011 -0.011 -0.011 -0.011

rinc
(-1.52) (-1.58) (-1.52) (-1.53)

-0.589
ln(rinc)
(-1.40)

0.010
u_rate
(0.94)

-0.039***
insure (-5.45)

0.010
wmu
(1.10)

0.004
white
(0.72)

0.000
black
(0.01)

-0.000
hisp
(-0.11)

Sample
600 600 600 600 450 600 600 600 600
Size

R2
0.542 0.545 0.545 0.541 0.355 0.541 0.546 0.545 0.546
Within

R2
0.080 0.020 0.025 0.221 0.094 0.291 0.004 0.020 0.015
Between

R2
0.204 0.165 0.173 0.181 0.137 0.187 0.120 0.164 0.158
Overall

Note: The t-statistic for each point estimate is included in parentheses below the numeric value of the coefficient.
The symbols of *, **, and *** signal statistical significance at the 90%, 95%, and 99% confidence intervals,
respectively. Dummy variables for year and county are excluded from the table.

Model 5 confirms evidence in Table 6c, and suggests that every 1 percentage point

increase in health insurance coverage at the state-level during the period 2006 to 2014

33
corresponded to approximately a 3.9% reduction in the rate of fatal drug overdoses per capita. If

this relationship persisted with the same point-estimate at the national-level through 2017 and,

assuming it was a causal relationship10, this would suggest that the ACA’s expansion of health

insurance access by about 6 percentage points (Cohen & Martinez, 2016) would be holding

today’s drug overdose mortality rate roughly 23.4% lower than where it would without

implementation of the law.

Despite the absence of statistically significant findings for the remaining eight of the nine

regressions, the estimated coefficients do offer promise for further research. The point estimates

are significant for public policy, but appear statistically insignificant due to a dearth of

observations. Should the roughly 1 to 2% decrease in the drug poisoning mortality rate for a one

percentage point increase in the poverty rate, the unemployment rate, the white unemployment

rate, the white male unemployment rate, or a $1,000 increase in real median household income

be found in papers leveraging different data sources, they would prove extraordinarily significant

for public health policymakers. Moreover, if the results of Table 7, Model 3 prove consistent

across future work a -0.589 income elasticity of fatal drug overdoses could begin to establish a

body of academic literature suggesting drugs like opioids are effectively inferior goods.

VII. Conclusion

Admittedly, there are a number of ways in which this paper’s methodology is limited.

Both datasets only span the timeframe of 2003 to 2014, which includes just a single economic

downturn, the Great Recession of 2007 to 2009. This somewhat tempers the external validity of

applying the results to future shocks, which are likely to be significantly less severe and may hit

the housing and financial services sectors less intensely. With an absence of obvious and readily

10 This is exceedingly stringent set of assumptions.

34
available data on instrumental variables there was no apparent solution to issues of simultaneous

causality between drug use and local economic prospects or omitted variable bias, particularly

with respect to education. The innate trouble with reliably estimating black market supply,

prices, and quality of illicit drugs likely make isolating shifts in the demand for illicit drugs

impractical. Likewise, the relocation of workers in search of better job prospects from county to

county or state to state may introduce additional biases for which it is difficult to correct.

Evidence from county-level regressions suggest differences in internal population growth and

migration patterns that correlate with drug overdoses over the period, which are extraordinarily

difficult to disentangle.

Although the methods applied in this paper provide valuable reduced form estimates,

they do not afford reliable structural form estimates to decompose the individual effects of the

competing pressures of less disposable income and greater psychological pressure. This problem

also makes it difficult to assess the mechanisms through which health insurance may reduce drug

overdose mortality. More fundamentally, it is still not clear what is driving the secular trend of

rapid rises in overdose mortality, and the popularization of the “despair death” narrative, which

asserts that these deaths are primarily a result of economic malaise, does not fully explain why

overdoses continue to climb both nationally and across a broad swath of counties well into an

economic upswing. Until the key question of why economic conditions and drug addiction are

associated with one another is addressed in future research, it will be difficult for policymakers to

devise solutions that could counteract the long-run, secular trend.

Yet, several findings uncovered from the recently released CDC data used in this study do

offer some preliminary conclusions on the relationship between economic conditions and drug

use. Namely, that measures of improving economic wellbeing are associated with declining rates

35
of fatal drug overdose, and that drug overdose mortality in the era of the Great Recession varies

counter-cyclically. In relation to previous research, the evidence suggests that fatal drug

incidence, despite being driven by unintentional overdoses, may have more in common with

binge drinking and suicide than the regular consumption of either alcohol or tobacco. Presuming

that drug overdoses correlate strongly with overall drug use, such a finding would suggest that

the psychological influences of economic anxiety may dominate the income effect innate to

normal goods. At the same time, the possibility that heavy drug users’ binges are driving spikes

in overdose mortality should not be discounted in the absence of quality evidence that separates

infrequent and frequent users of drugs.

Racial controls, on balance, confirm public health data, which suggest that white

Americans are experiencing the bulk of recent increases in the drug overdose rate. The results for

interaction terms such as white unemployment and white male unemployment tend not to differ

significantly from corresponding aggregate measures of economic wellbeing like the overall

unemployment rate. Differences in significance contingent on aggregation level likely reflect the

intuition that people are most likely to have their economic wellbeing and outlook reflected in

their county domicile, rather than their state of residence. Thus the findings imply that there are

not detectible gaps between the responsiveness of non-hispanic white Americans, non-hispanic

African Americans, non-Hispanic Asian Americans, and Hispanic Americans to changes in local

economic conditions.

It should be noted, that this paper offers ample evidence that may be of use to

policymakers interested in overdose crisis mitigation. In particular, evidence on the association

between health insurance coverage, a state’s adoption of key drugs laws, and overdose deaths are

valuable. With the potential repeal of the ACA’s Medicaid expansion and 24 million Americans

36
at risk of losing health insurance access (CBO, 2017), this paper’s findings on the possibility that

such a policy change may result in increasing rates of overdose from nonprescription drugs as

consumers switch to cheaper black market alternatives for pain relief may be worth

consideration. Moreover, the somewhat consistent evidence on “Good Samaritan” laws putting

downward pressure on the overdose fatality rate may illustrate an example of how harm

reduction legislation may be structured.

Finally, policymakers may take care to note the implications of the countercyclical trend

of drug mortality for fiscal federalism. Such a relationship between the business cycle and drug

mortality may make it wise for the federal government to offer states and municipalities

categorical grants for rehabilitation funding, because as of early 2017 forty-nine states are

constitutionally obligated to balance their budgets, making long-run budgets for state drug

rehabilitation programs susceptible to budget cuts at precisely the time that drug overdoses are

spiking. The distribution of naloxone to state and local authorities would likewise benefit from

being targeted at areas particularly hard hit by economic downturns, and whose demographic

patterns fit those of counties facing the brunt of the drug overdose crisis. 


37
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 Appendix

Table A: Timeline of State and D.C. Medical Marijuana Legalization 1995-2014

State Legislation Approval Effective Date 1st Full Legal Year

AK Ballot Measure 8 11/3/1998 3/4/1999 2000

AZ Ballot Proposition 203 11/2/2010 11/2/2010 2011

CA Ballot Proposition 215 11/5/1996 11/6/1996 1997

CO Ballot Amendment 20 11/7/2000 6/1/2001 2002

CT House Bill 5389 5/31/2012 10/1/2012 2013

DC Amendment Act B18-622 5/21/2010 7/27/2010 2011

DE Senate Bill 17 5/13/2011 7/1/2011 2012

HI Senate Bill 862 6/14/2000 12/28/2000 2001

IL House Bill 1 8/1/2013 1/1/2014 2014

ME Ballot Question 2 11/2/1999 12/22/1999 2000

MD House Bill 881 4/14/2014 6/1/2014 2015

MA Ballot Question 3 11/6/2012 1/1/2013 2013

MI Proposal 13 11/4/2008 12/4/2008 2009

MN SF 2470 5/29/2014 5/30/2014 2015

MT Initiative 148 11/2/2004 11/2/2004 2005

NV Ballot Question 9 11/7/2000 10/1/2001 2002

NH House Bill 573 7/23/2013 7/23/2013 2014

NJ Senate Bill 119 1/18/2010 7/18/2010 2011

NM Senate Bill 523 5/13/2007 6/1/2007 2008

NY Assembly Bill 6357 7/5/2014 7/5/2014 2015

OR Ballot Measure 67 11/3/1998 12/3/1998 1999

RI Senate Bill 0710 1/3/2006 1/3/2006 2006

VT Senate Bill 76 5/26/2004 7/1/2004 2005

WA Ballot Initiative I-692 11/3/1998 11/3/1998 1999

Bolded years indicate medical marijuana policy changes taking effect within the timespan of this paper.

41
 Table B: Timeline of State and D.C. Naloxone Access Law Implementation 1999-2014
State Naloxone Decriminalization Standing Order Effective Date 1st Full Legal Year

CA Y Y 1/1/2008 2008

CO N Y 5/10/2013 2014

CT N N 10/1/2003 2004

DC Y N 3/19/2013 2014

DE N Y 8/4/2014 2015

GA N Y 4/24/2014 2015

IL Y Y 1/1/2010 2011

KY Y Y 6/25/2013 2014

ME N Y 4/29/2014 2015

MD N Y 10/1/2013 2014

MA Y Y 8/2/2012 2013

MI N N 10/14/2014 2015

MN Y Y 5/10/2014 2015

NJ Y Y 7/1/2013 2014

NM Y Y 4/3/2001 2002

NY Y Y 6/24/2014 2015

NC N Y 4/9/2013 2014

OH N Y 3/11/2014 2015

OK N N 11/1/2013 2014

OR N Y 6/6/2013 2014

PA N Y 11/29/2014 2015

RI Y Y 6/18/2012 2013

TN N Y 7/1/2014 2015

UT N Y 5/13/2014 2015

VT Y Y 7/1/2013 2014

VA N Y 7/1/2013 2014

WA Y Y 6/10/2010 2011

WI Y Y 4/9/2014 2015

Bolded years indicate medical marijuana policy changes taking effect within the timespan of this paper.

Note: This Table is excerpted directly from Rees, Sabia, Argys, Latshaw, & Dave (2017).


42
 Table C: Timeline of State and D.C. Good Samaritan Law Implementation 1999-2014
State Extends to Drug Paraphernalia Extends to Alcohol Effective Date 1st Full Legal Year

AK N N 10/8/2014 2015

CA Y N 1/1/2013 2013

CO Y N 5/29/2012 2013

CT Y N 10/1/2011 2012

DC Y Y 3/19/2013 2014

DE Y N 8/31/2013 2014

FL N N 10/1/2012 2013

GA Y N 4/24/2014 2015

IL N N 6/1/2012 2013

LA N N 8/1/2014 2015

MD Y Y 10/1/2014 2015

MA N N 8/2/2012 2013

MN Y N 7/1/2014 2015

NJ Y N 5/2/2013 2014

NM N N 6/15/2007 2008

NY Y Y 9/18/2011 2012

NC Y N 4/9/2013 2014

PA Y N 12/1/2014 2015

RI Y N 6/18/2012 2013

UT Y N 3/20/2014 2015

VT N Y 6/5/2013 2014

WA N Y 6/10/2010 2011

WI Y N 4/9/2014 2015

Bolded years indicate medical marijuana policy changes taking effect within the timespan of this paper.

Note: This Table is excerpted directly from Rees, Sabia, Argys, Latshaw, & Dave (2017).


43
 Table D: County-Level Data Summary

Variable Description Observations Minimum Maximum Source

Unique Numeric
fips 37,344 1001 56045 Centers for Disease Control
Identifier for Counties

year Observation Year 37,344 2003 2014 Centers for Disease Control

pop County Population 37,344 55 1.01E+07 Centers for Disease Control

Natural Log of County

ln_pop 37,344 4.007 16.129 Generated = ln(pop)
Population

Discrete Lower Bound

min_death of Overdose Death Rate 37,344 0 20 Centers for Disease Control
per 100,000 Residents

Bin Number of the

bin 37,344 1 11 Centers for Disease Control
Estimated Death Rate

pov Poverty Rate 37,344 2.2 62 US Census Bureau

Median Household
med_hh_inc 37,344 $16,868 $125,635 US Census Bureau
Income

Median Household Generated

inc 37,344 16.868 125.635
Income ($1000s) = (med_hh_inc / 1000)

Consumer Price Index

cpi 37,344 184 236.7 St. Louis Fed
for Observation Year

Real Median Household

Income Adjusted to Generated
rinc 37,344 19.943 129.230
2014 Price Levels = (236.7/cpi)*med_hh_inc
($1000s)

u_rate Unemployment Rate 37,330 1.1 28.9 Bureau of Labor Statistics

1 Year Lagged
lag1u 34,218 1.1 28.9 Bureau of Labor Statistics
Unemployment Rate

2 Year Lagged
lag2u 31,106 1.1 28.9 Bureau of Labor Statistics
Unemployment Rate

3 Year Lagged
lag3u 27,994 1.3 28.9 Bureau of Labor Statistics
Unemployment Rate

3 Year Rolling Average

rollavg3u 31,092 1.2 28.4 Bureau of Labor Statistics
of Unemployment Rate

4 Year Rolling Average

rollavg4u 27,980 1.2 28.1 Bureau of Labor Statistics
of Unemployment Rate

44
Variable Description Observations Minimum Maximum Source

Health Insurance
insure 28,008 50.5 97.3 US Census Bureau
Coverage Rate

Hispanic Share of
hisp 24,896 0.0 96.9 US Census Bureau
Population

Non-hispanic White
white 24,896 2.5 99.4 US Census Bureau
Share of Population

Non-hispanic Black
black 24,896 0.0 85.9 US Census Bureau
Share of Population

Non-hispanic Asian
American or Pacific
asian 24,896 0.0 44.8 US Census Bureau
Islander Share of
Population

Non-hispanic Native
American or Alaskan
native 24,896 0.0 94.2 US Census Bureau
Native Share of
Population

Dummy Variable for the

Legality of Medical
National Organization for
marijuana Marijuana in a County 37,344 0 1
Reform of Marijuana Laws
at the Beginning of the
Year

Dummy Variable for the

Enactment of a “Good
Rees, Sabia, Argys,
GSL Samaritan” Law in a 37,344 0 1
Latshaw, & Dave (2017)
County at the
Beginning of the Year

Dummy Variable for the

Enactment of a
Rees, Sabia, Argys,
NAL Naloxone Access Law 37,344 0 1
Latshaw, & Dave (2017)
in a County at the
Beginning of the Year

45
 Table E: State-Level Data Summary

Variable Description Observations Minimum Maximum Source

Unique Numeric Identifier

fips 600 1 56 Centers for Disease Control
for State/DC

year Observation Year 600 2003 2014 Centers for Disease Control

Crude Overdose Death

crude Rate per 100,000 600 1.9 34.2 Centers for Disease Control
Residents

Age-Adjusted Overdose
death Death Rate per 100,000 600 1.8 36.3 Centers for Disease Control
Residents

pov Poverty Rate 600 6.4 23.9 US Census Bureau

Median Household
med_hh_inc 600 $32,397 $73,851 US Census Bureau
Income

Median Household Generated = (med_hh_inc)/

inc 600 32.397 73.851
Income ($1000s) 1000

Natural Log of Median

ln_inc 600 3.478 4.302 Generated = ln(inc)
Household Income

Consumer Price Index for

cpi 600 184 236.7 St. Louis Fed
Observation Year

Real Median Household

Generated
rinc Income Adjusted to 2014 600 38.328 77.631
= (236.7/cpi)*med_hh_inc
Price Levels ($1000s)

u_rate Unemployment Rate 600 2.6 14.4 Bureau of Labor Statistics

Health Insurance
insure 450 72.4 96.2 Census Bureau
Coverage Rate

Non-Hispanic White
wu 600 2.2 13.9 Bureau of Labor Statistics
Unemployment Rate

Non-Hispanic White Male

wmu 600 2.0 15.4 Bureau of Labor Statistics
Unemployment Rate

Hispanic Share of
hisp 600 0.4 46.5 US Census Bureau
Population

Non-hispanic White Share

white 600 15.6 96.6 US Census Bureau
of Population

Non-hispanic Black Share

black 600 0.1 37.5 US Census Bureau
of Population

Non-hispanic Asian
asian American Share of 600 0.1 47.2 US Census Bureau
Population

46
Variable Description Observations Minimum Maximum Source

Non-hispanic Pacific
pi Islander Share of 600 0.0 14.4 US Census Bureau
Population

Non-hispanic Native
American or Alaskan
native 600 0.0 15.1 US Census Bureau
Native Share of
Population

Dummy Variable for the

Legality of Medical National Organization for
marijuana 600 0 1
Marijuana in a State at the Reform of Marijuana Laws
Beginning of the Year

Dummy Variable for the

Enactment of a “Good
Rees, Sabia, Argys, Latshaw,
GSL Samaritan” Law in a 600 0 1
& Dave (2017)
County at the Beginning
of the Year

Dummy Variable for the

Enactment of a Naloxone Rees, Sabia, Argys, Latshaw,
NAL 600 0 1
Access Law in a County at & Dave (2017)
the Beginning of the Year

47