What Drives Consumer Demand for Firearms? Insights into Price Sensitivity and Policy Implications

This study examines consumer demand for firearms, focusing on price sensitivity and substitution patterns across gun types. Using a stated-choice conjoint survey of 22,522 U.S. adults (with 4,018 firearm-interested respondents), the research estimates individual-level demand. Findings reveal that overall, consumers are price insensitive, but first-time buyers exhibit greater price sensitivity, particularly for handguns. A key result is substantial substitution from semi-automatic rifles (“assault weapons”) to handguns, which are statistically more likely to be involved in crime. The study suggests that price-based regulations, such as taxes, may disproportionately reduce handgun purchases among first-time buyers, potentially influencing firearm-related crime rates.

Full Citation and Link to Article

Moshary, Sarah, Bradley T. Shapiro, and Sara Drango. (2024). Preferences for Firearms. AMERICAN ECONOMIC REVIEW: INSIGHTS (FORTHCOMING). https://www.aeaweb.org/articles?id=10.1257/aeri.20230435#:~:text=We%20find%20that%20potential%20firearm,with%20more%20crimes%20per%20gun.

Extended Summary

Central Research Question

The primary research question of this study is: How do consumers make purchasing decisions regarding firearms, and what role does price sensitivity play in shaping firearm demand? The research aims to understand individual preferences for different types of firearms, the extent to which consumers are sensitive to price changes, and how substitution patterns between gun types influence overall ownership. By addressing these factors, the study seeks to provide insight into how firearm policies, particularly price-based regulations such as taxes, might impact gun purchases and the distribution of firearm types in circulation.

Previous Literature

Prior research on firearms has largely focused on the causal relationship between gun ownership and crime, often producing conflicting results. Some studies suggest that increased gun ownership leads to higher crime rates (Duggan, 2001; Cook & Ludwig, 2006), while others argue that it deters crime (Lott & Mustard, 1997). A separate body of work examines the effects of specific gun regulations, such as background checks and waiting periods, on crime and ownership rates (Ayres & Donohue, 2002; Edwards et al., 2018). However, much of this literature does not directly address consumer demand for firearms or the factors influencing purchasing decisions.

More closely related to the current study are investigations into gun demand determinants. Some research has examined how crime rates influence firearm purchases (Kim, 2021; Levine & McKnight, 2017), while other studies have analyzed the effects of mass shootings on gun sales and legislation (Luca, Malhotra & Poliquin, 2020). The closest comparisons to this study are Bice & Hemley (2002) and McDougal, Montolio & Brauer (2023), which estimate aggregate firearm demand. However, these studies lack detailed individual-level data, limiting their ability to capture heterogeneous consumer preferences. The current study seeks to fill this gap by employing stated-choice experiments to estimate individual-level price sensitivity and substitution patterns across firearm types.

Data

To overcome the lack of centralized, detailed sales data on firearm purchases, the study relies on a stated-choice conjoint experiment, a method commonly used in marketing research to analyze consumer preferences. The data was collected through a survey conducted with 22,522 U.S. adults in March and April 2022, in partnership with Harris Poll. Out of this sample, 4,018 respondents either currently owned a firearm, expressed interest in purchasing one in the next year, or indicated general interest in firearm ownership. This subset forms the basis for demand estimation.

Respondents were asked about their current firearm ownership status, interest in purchasing different firearm types (handguns, revolvers, shotguns, and rifles), and motivations for gun ownership (e.g., protection, recreation, hunting, or collecting). Those interested in buying a firearm completed a series of seven hypothetical purchasing tasks in which they selected their preferred option among three firearms, with randomly assigned prices. After selecting a firearm, they were asked whether they would buy it at the quoted price. This design allows for estimating how price changes influence firearm preferences and substitution between different types of guns.

To supplement this data, the study incorporates external sources such as FBI background check data and firearm trace reports from the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) to validate findings. Additionally, firearm prices were scraped from GalleryofGuns.com to ensure realistic price variation in the survey.

Methods

The study employs a random utility model with limited consideration, a method commonly used in economics to estimate demand while accounting for consumer heterogeneity. The model assumes that each respondent derives utility from firearm attributes, price, and their individual preferences. Consumers choose the firearm that maximizes their utility, but they may not consider all firearm types due to personal preferences or lack of information.

To estimate price sensitivity, substitution patterns, and demand elasticities, the study uses Bayesian Markov Chain Monte Carlo (MCMC) estimation techniques. The price elasticity of demand is measured by analyzing how consumers’ purchasing probabilities change when firearm prices are increased or decreased by random amounts (-50%, -20%, +20%, +50%) from the average price.

Substitution patterns are assessed through diversion ratios, which indicate how consumers shift their preferences when their first-choice firearm becomes more expensive or unavailable. For example, if a consumer who initially preferred a semi-automatic rifle chooses a handgun instead when the rifle’s price increases, this reveals a substitution effect.

Findings/Size Effects

The study identifies three primary findings:

1. Consumers Are Generally Price InsensitiveThe demand for firearms is relatively inelastic, meaning that price changes have a limited effect on overall sales. This suggests that consumers place high value on firearm ownership and are willing to pay premium prices. However, this insensitivity varies by buyer type.

2. First-Time Buyers Are More Price SensitiveUnlike existing gun owners, first-time buyers exhibit greater price sensitivity. This means that price-based regulations, such as taxes, are more likely to reduce purchases among first-time buyers than among those who already own firearms. Since handguns are the most common choice for first-time buyers, this finding has important implications for crime reduction, as handguns are disproportionately used in crimes compared to long guns.

3. Substantial Substitution from Semi-Automatic Rifles to HandgunsWhen restrictions are placed on semi-automatic rifles (often labeled as “assault weapons”), consumers tend to substitute toward handguns rather than forgoing a firearm purchase entirely. The study finds little substitution in the opposite direction—handgun buyers are unlikely to switch to semi-automatic rifles. This suggests that bans or restrictions on semi-automatic rifles may unintentionally lead to increased handgun sales, potentially raising crime risks since handguns are more frequently used in violent incidents.

   
   

The magnitude of these effects is notable. For example, the study estimates that a significant percentage of consumers (60%) substitute within the same gun category when faced with a price increase, but when substitution occurs between categories, handguns are the most likely alternative. This suggests that policies aimed at restricting one firearm type must consider how demand shifts toward other types.

Conclusion

This study contributes to the literature on firearm regulation by providing a detailed analysis of consumer demand for firearms. By using stated-choice experiments, it estimates price sensitivity and substitution patterns that inform potential regulatory impacts. The key takeaway is that firearm demand is highly inelastic overall, but first-time buyers are more responsive to price changes. Policies that increase firearm prices (such as taxes) are likely to reduce first-time handgun purchases, potentially influencing crime rates. However, restrictions targeting semi-automatic rifles may have limited effects on overall gun ownership, as consumers often substitute toward handguns instead.

These findings highlight the complexity of firearm regulation. While price-based policies may reduce gun ownership among certain groups, they may also lead to unintended shifts in the types of firearms purchased. Future research could expand on this study by incorporating observational sales data or examining how state-level policies influence consumer behavior over time. Ultimately, understanding consumer demand for firearms is essential for crafting policies that effectively balance public safety with individual rights.