The purpose of the seed grant was to examine the question of how adolescents’ perceptions of future risk influence illicit drug use. The primary hypothesis is that some adolescents have mistaken perceptions about future uncertainty, and that these perceptions affect the likelihood that they will use illicit drugs. If an adolescent is overly pessimistic, that is, his (her) belief that one of these events will transpire is much greater than the actuarial likelihood of the event occurring, his (her) expected future utility will be lower. As a consequence, he (she) will be more likely to engage in activities with potential adverse consequences for the future, such as illicit drug use.

Using the 1997 National Longitudinal Survey of Youth (NLSY-97) preliminary regression analysis was conducted to examine drug utilization as a function of perceptions of future risk, controlling for demographic characteristics and other social and environmental factors. Data from the first and sixth waves of the NLSY-97 were used. The outcome variables were initiation of marijuana use by wave 7 and frequency of use at wave 7. To address possible reverse causality between drug use and perceptions of the future, analysis was restricted to adolescents who did not use drugs at wave 1.

Perceptions of future risk were measured using questions about adolescents’ self-reported chances of dying within the next year and before age 20. The actuarial probability of dying within this time frame was calculated for each age. The risk of dying ranged from 0.03% for a 14 year old within one year to 0.5% for a 14 year old by age 20. The self-reported chances of dying in the NLSY-97 were reported on a scale from 1-100.

The majority of adolescents reported perceiving their risk of dying to be much higher than actuarial estimates, which suggests that most of them are overly pessimistic about their chances of survival. Adolescents who overestimated their risk of dying in 1 year were more likely to initiate marijuana use by wave 7 and to smoke marijuana on a regular basis at wave 7 than similar adolescents who assessed the risk of death more accurately, but the results were only weakly significant. However, this result is driven by the fact that teenagers who have a self reported risk of dying within one year of 2-10 percent are much more likely to initiate marijuana use by wave 7 (47% vs. 38% for those accurately estimating mortality chances within 1 year) and to be regular users at wave 7 (8% vs. 4%). Results are similar when the probability of dying by age 20 is used instead. The degree of over-prediction is not monotonic, indeed higher levels of over-prediction do not show any relationship with marijuana use. Furthermore, there was no relation between mortality expectations and cocaine use. These latter findings are contrary to what theory would predict.

Although these results were different from what we would predict a priori, they still have policy relevance. Reporting a probability of short term death between 2-10 percent was very strongly associated with subsequent marijuana use. This is useful information for identifying youth most at risk so that interventions may be targeted efficiently. These results also suggest that helping adolescents better understand future risk may be an effective way to decrease marijuana use. Results were presented at the American Society of Health Economists Conference in June, 2006.