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Illegal drug use and public policy
Michael Grossman1, Frank J Chaloupka, Kyumin Shim
1City University of New York Graduate Center, Health Economics Program, USA.
Health Affairs (Project Hope)
|March 20, 2002
Summary
This study examines the economic arguments surrounding drug legalization. Evidence suggests that drug demand is price-responsive and legalization with taxation is feasible.
Area of Science:
- Economics
- Public Policy
- Substance Abuse Research
Background:
- The debate on legalizing illicit drugs like marijuana, cocaine, and heroin has been ongoing since the 1980s.
- Key arguments involve price elasticity of demand and the feasibility of taxation post-legalization.
Purpose of the Study:
- To analyze the theoretical and empirical evidence regarding drug legalization.
- To evaluate the validity of claims about price insensitivity and taxation feasibility.
Main Methods:
- Review of existing economic theories on substance demand.
- Analysis of empirical studies on drug pricing and consumption.
Main Results:
- Contrary to some proponents' claims, drug demand is responsive to price.
- Opponents' assertions that prices would plummet and taxation would be unfeasible are also challenged.
- The evidence suggests a more nuanced economic impact than commonly argued.
Conclusions:
- The economic propositions debated in drug legalization are not supported by current evidence.
- Revisiting the economic feasibility of drug legalization and taxation is warranted based on empirical findings.