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Crime and Drugs: An Economic Approach

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  • Doyle, Chris
  • Smith, Jennifer C.

Abstract

We present a model which ties together rational drug consumption, taxation, crime and other drug-related externalities. Drug control policy is addressed using an optimal tax framework. Consumption, possession and production of a drug may be prohibited, legalized or decriminalized. In all regimes illicit production of a drug may take place and drug-related crime occurs. We show that illicit drug production, the price elasticity of demand for a drug, the addictive nature of a drug, the e¤ectiveness of drug enforcement strategies, and income distribution all in‡uence optimal (second best) policy. Prohibition is contrasted with decriminalization and legalization, and where legalization yields a higher welfare than prohibition we show that this can be associated with greater drug-related crime and more drug addiction. The model is discussed in the context of US National Drug Control Strategy.

Suggested Citation

  • Doyle, Chris & Smith, Jennifer C., 1997. "Crime and Drugs: An Economic Approach," Economic Research Papers 268746, University of Warwick - Department of Economics.
  • Handle: RePEc:ags:uwarer:268746
    DOI: 10.22004/ag.econ.268746
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    References listed on IDEAS

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    1. Lee, Li Way, 1993. "Would Harassing Drug Users Work?," Journal of Political Economy, University of Chicago Press, vol. 101(5), pages 939-959, October.
    2. Richard B. Freeman, 1996. "Why Do So Many Young American Men Commit Crimes and What Might We Do about It?," Journal of Economic Perspectives, American Economic Association, vol. 10(1), pages 25-42, Winter.
    3. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 1-54, National Bureau of Economic Research, Inc.
    4. Becker, Gary S & Murphy, Kevin M, 1988. "A Theory of Rational Addiction," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 675-700, August.
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    6. Chaloupka, Frank, 1991. "Rational Addictive Behavior and Cigarette Smoking," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 722-742, August.
    7. Peter A. Diamond, 1973. "Consumption Externalities and Imperfect Corrective Pricing," Bell Journal of Economics, The RAND Corporation, vol. 4(2), pages 526-538, Autumn.
    8. John J. DiIulio, 1996. "Help Wanted: Economists, Crime and Public Policy," Journal of Economic Perspectives, American Economic Association, vol. 10(1), pages 3-24, Winter.
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    Cited by:

    1. Ziggy MacDonald, 2004. "What Price Drug Use? The Contribution of Economics to an Evidence‐Based Drugs Policy," Journal of Economic Surveys, Wiley Blackwell, vol. 18(2), pages 113-152, April.
    2. Donici, Andreea Nicoleta/NA & Maha, Andreea/A, 2012. "The Impact of soft drug legalization on Romania," MPRA Paper 36191, University Library of Munich, Germany.

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