All the good in this article belongs to the Lord and the bad is mine. The data is DEA STRIDE data and was analyzed with OLS both regular and logistic model based on the potency of cocaine. Milton Friedman's theory is that as the government increases regulation of a substance it increases in purity. It is unclear if Milton Friedman meant laws or law enforcement crackdowns. I analyzed it with law enforcement crackdowns using the case count where each entry in the database represents a case filed. This variable has turned out to be of great importance in the general analysis of drug data as it has all kinds of implications. The variable actc is DEA activity according to cocaine cases and act is DEA activity in general, that is DEA cases of every kind. Getting the parameters set correctly was important in obtaining a blessed model that had a decent result on the Ramsey reset test. The evidence is somewhat mixed however, most of the models indicate that as law enforcement cracks down cocaine becomes less potent. The best model according to the Ramsey reset test showed general DEA activity reduces cocaine potency while cocaine specific activity increased it.  The nonlinear model with actc squared (cocaine specific activity) shows that drug potency is decreasing in DEA activity. There is a lot more to be done with the Macroeconomic variables included in the last model. 

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My do files and output are below.

Milton Friedman Do File

Log File

STRIDE Data

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