Crime and Justice

The Drug War

Recent work suggests that when demand for a good is inelastic, the cost of making consumption illegal exceeds the gain.

Enforcement raises costs for suppliers, who must respond to the risk of imprisonment and other punishments. This cost is passed on to the consumer, which induces lower consumption when demand is relatively elastic. However, in the case of illegal goods like drugs (where demand seems inelastic), higher prices lead not to less use, but to an increase in total spending.

Thus this platform suggests that excise taxes and persuasive techniques (such as advertising) are far more effective uses of enforcement expenditures.

Source: Gary S. Becker, Kevin M. Murphy, Michael Grossman, "The Economic Theory of Illegal Goods: The Case of Drugs," NBER Working Paper No. 10976, December 2004

62.2% of economists surveyed favor marijuana legalization.

http://www.bepress.com/ev/vol3/iss9/art1/

Regardless of (or more precisely, because of) the US Drug War, marijuana is now the largest US cash crop with $35 billion per year in production, which exceeds corn ($23 billion), soybeans ($17.6 billion) and hay ($12.2 billion). http://www.latimes.com/news/local/la-me-pot18dec18,0,5264617.story?coll=la-home-headlines