Jeremy Greenwood
Nezih Guner
Karen Kopecky

There have been more than 500,000 opioid overdose deaths since 2000. To analyze the opioid epidemic, a model is constructed where individuals choose whether to use opioids recreationally, knowing the probabilities of addiction and dying. These odds are functions of recreational opioid usage. 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. The structural model is constructed to match the estimated Markov chains. The epidemic’s drivers and the impact of medical interventions are examined.

Publication Type  
Working Paper
File Description  
First version, September 14, 2022
JEL Codes  
D11: Consumer Economics: Theory
D12: Consumer Economics: Empirical Analysis
E13: General Aggregative Models: Neoclassical
I12: Health Production
I14: Health and Inequality
I31: General Welfare
J11: Demographic Trends, Macroeconomic Effects, and Forecasts
J17: Demographic Economics: Value of Life; Forgone Income
college/non-college educated
Markov chain
medical interventions
state-contingent preferences
structural model
subjective and objective beliefs