Chapter 2: Economics of drug prohibition
Jeﬀrey A. Miron According to conventional wisdom, illicit drugs are responsible for a broad range of social and personal ills, including crime, diminished health and reduced productivity. Popular thinking attributes these ills mainly to the characteristics of drugs themselves. For example, standard accounts suggest that psychopharmacological eﬀects of drugs make users commit violent and other crimes. Similarly, standard depictions suggest that mind-altering and addictive properties of drugs cause users to suﬀer poor health or diminished productivity. This chapter explains that the social and personal ills typically associated with illicit drugs have little to do with drugs themselves; instead, they result from the economic incentives created by drug prohibition. This does not mean drug use is benign; drug use carries signiﬁcant risks in some situations, but the magnitude of these risks is not markedly diﬀerent from that of many legal goods. Sections 1 and 2 of the chapter analyse the eﬀect of prohibition on the price and quantity of drugs consumed. The standard defence of prohibition assumes this policy eliminates or substantially reduces the market for drugs; in this case, prohibition eliminates or substantially reduces any negative eﬀects of drug use. The analysis here, however, shows that while price and quantity plausibly diﬀer between a legal market and a prohibited market, both a priori reasoning and existing evidence suggest this diﬀerence is far smaller than assumed in most accounts. Thus, even if drug use itself causes the ills typically associated with drugs,...
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