Friday, March 8, 2013

The economic argument against drug prohibition

Posted By on 03.08.13 at 07:33 AM

University of Chicago economist Jim Leitzel: I dont like the idea of putting people in prison for wanting to consume a drug.
  • Hilary Arnow
  • University of Chicago economist Jim Leitzel: "I don't like the idea of putting people in prison for wanting to consume a drug."
The drug warriors fought back this week. In separate statements, a United Nations agency and a group of former DEA chiefs called on the Obama administration to thwart the marijuana-legalization laws approved by voters in Washington and Colorado last fall. The UN says the new policies violate international treaties, while the former drug czars believe it's critical that U.S. Attorney General Eric Holder file suit before legalization spreads to other states. "Keeping drugs illegal reduces their availability and lessens willingness to use them," the czars argue. Holder said Wednesday that he'll announce a policy "relatively soon."

In Jim Leitzel's view, the laws of economics should lead us to a far different approach—one that recognizes demand and lets people consume drugs, even hard drugs, while using regulations to limit abuse. "Prohibition is not devoid of logic," he says, "but the logic is very flawed."

Leitzel teaches public policy and economics at the University of Chicago, specializing in the economics of vice and rule breaking. We sat down to talk about drugs and illegal markets.

From what I've seen of drug markets, people don't just choose to break rules randomly—they have reasons. It seems that public policies almost need to follow what people do or they're not going to be respected.

It does have the feel of, if you're setting down the sidewalks of a college campus, wait for three months and see the paths people take.

But not all the time. Some of this evasion is socially costly, and you want to distinguish between the part that makes sense to legalize and the part that's really bad. Gambling is now by and large a legal vice in the U.S., in part because people came to accept the idea that a lot of gambling is benign from a social point of view. Now I don't think we've done a good job of regulating gambling—I don't think it's as socially benign as it ought to be. Nonetheless, the general approach works.

That's one of the big problems with drug prohibition. Most uses of the currently illegal drugs are socially benign. We have a policy that clamps down on the benign and the not-so-benign almost simultaneously. It's a terribly costly policy.

But I think a lot of people are uncomfortable with accepting that argument as it applies to, say, heroin. You're arguing that most uses of heroin don't have a widespread social cost.

One of the costs of prohibition is that we get very poor information, so you have to be very careful about saying what most heroin users do. The people we learn about are a biased sample—they show up at the police station or at the emergency room, so they tend to be the more problematic of the heroin users.

I don't want to give the impression that heroin or cocaine are more benign than I think they are. Our brains evolved over millions of years to give us pleasure to do things that help pass along our genes—eating, drinking, having sex, nursing children. And then along comes some chemical that had nothing to do with our evolutionary environment and it unlocks the pleasure. This is a really dangerous situation. You've probably heard the story: people start using heroin to feel good, and they end up taking heroin to feel normal.

But my belief is that most uses of all illegal drugs are socially benign, and I would include heroin. Lots of people use a drug once or twice or three times but do not become regular users.

You make this stuff illegal and immediately you get a different sample of the population willing to try it, and you reduce the quality so that nobody knows the purity they're buying. So you put them at a health risk; you make them unwilling to go to the police if there's trouble in the market; you make them unwilling to take their friends to the emergency room. You might, at least at first, reduce the total number of people with a problem, but you've made that problem worse for them.

I remember Congressman Danny Davis telling me that when he drives to work in the morning, he sees people already lined up at the liquor store to get booze, and he was worried that if drugs are legalized the addict population could soar.

We would worry about a large increase in prevalence—even though most of it would be benign, and I think the people who are most likely to get in trouble with the drugs are already getting in trouble. Nonetheless, it's one thing if a lot more people consume a few more marijuana joints a month, but it's another if we turn into a nation of addicts.

What I would suggest is a set of conservative defaults built into the system. So when you turn 21 you are not allowed to purchase the harder drugs unless you get a license, and to get a license you would have to pass an exam indicating you understand the dangers and the [law]. There will be quantity limits. There will be taxes so the price will not just be the marginal production cost. There will be a waiting period where any time you want the drug, you can order it today and pick it up in three days, so you get rid of impulsive use.

The basic idea would be to lower the risk that someone turned into a full-blown addict. But I want people who want to use this drug and are willing to do so in a socially responsible way to have that opportunity.

Wait—you seem like a nice guy, you teach at the University of Chicago, and you're molding young minds. Why do you want people to have the opportunity to use heroin?

Yeah, I wouldn't recommend it. But I don't like the idea of putting people in prison for wanting to consume a drug.

There's two types of adult users. One is rational people who consume their drug like they consume apples or like they consume pens or other nonproblematic consumer goods. Then there are others for whom their use of this drug suggests some sort of brain disease or terrible self-control problems that are basically irrational.

In real life, we can't tell which people are using drugs rationally and which are using them irrationally. This is true with vices generally: Sometimes when I eat potato chips I'm rational and sometimes I'm out of control—and I don't even know when I switch.

So what we want is some sort of policy that would work pretty well no matter how much of the behavior is rational. It shouldn't be something that only makes sense if everybody is rational, like laissez-faire, and it shouldn't be something that only makes sense if everybody's irrational, which is to lock up everybody who's using it.

Let's face it—under what you've described, there would be high school kids who get access to their parents' heroin.

High school kids can get heroin now. By and large not easily, which is good, but a sufficiently motivated person can get heroin. The minima I've described are in place to make sure that one or two licensed users could not supply a local high school.

When we think about this stuff, we think about our legal drugs, alcohol and tobacco, and the leakage to underage people. But I would say it doesn't have to be that way. We have not been particularly serious about keeping alcohol away from kids. With tobacco, we weren't serious at all until ten or 12 years ago. Now people have lost their licenses for trying to sell to 15-year-olds. I think if we're serious we can do at least as well as we are now.

Even some critics of the war on drugs worry that the most vulnerable communities would be hardest hit by the liberalization of drug laws. Anecdotally, at least, it's easier to find the addicts on the west side than in Winnetka.

When you have a good that a lot of people want to purchase and you make it illegal, where are these black markets going to pop up? The open-air versions, at least, aren't going to pop up in rich neighborhoods. Instead, these are neighborhoods where heroin, cocaine, or meth is in some cases more available than milk. So the children are put at great risk of being recruited into the drug trade when there are so few decent opportunities in the legitimate economy.

It's very easy to fall into the prohibition mindset. One piece of logic that's very common is to say, 'If that person didn't use drugs, this bad thing would not have happened.' And that is absolutely correct. But the implication does not follow logically, which is that we need more prohibition.

Unfortunately, a world of no availability of drugs, or much more limited availability for a minimal cost, is not a feasible outcome. If you aren't led to that conclusion by theoretical considerations, well, unfortunately, the empirical evidence is in.

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