The Effect of Cannabis Use on Health: LISS Panel Data in the Netherlands

Cannabis use is quasi-legalized in the Netherlands, which means that individuals can buy small quantities of cannabis in coffee shops. Cannabis use in the Netherlands lies above the average of the European Union and therefore, it is important to know the effect of cannabis use on health. The instrumental variable approach is used with religion, presence of a coffee shop and distance to a coffee shop as instruments. Both presence and distance are relevant instruments to test the endogeneity of cannabis use. Cannabis use is tested to be exogenous, which means that OLS gives better estimates than IV. It is found that using cannabis will lead to a decrease of the SAH score and that, overall, healthy individuals use cannabis.