New Economic Thinking on Addiction and Legalization: Toward Sliding Price Elasticities of Demand for Addictive Substances and their Implications for Public Policy

Any consumer of an addictive substance begins with a first use of that substance. That decision is informed by the costs of use, including price, risk of addiction and other adverse health effects, and perceived benefits of use. As the consumer migrates from treating the addictive substance (for example, cocaine or alcohol) as a "luxury" to treating that same substance as a "necessity," substantial research indicates that the Price Elasticity of Demand (PED) for the drug shrinks, that is, the degree to which use is affected by price falls. Unlike the first time purchaser of drugs, who is assumed to have weighed the addicted substance's putative effects against costs and risks, often based on information (accurate and inaccurate) collected from peers, media, parents and the community-at-large, an addicted person's decision-making is defined by the state of addiction.

See below for a link to the Executive Summary.

http://www.natlalliance.org/pdfs/New%20Economic%20Thinking%20on%20Addiction%20and%20Legalization%20Executive%20Summary.pdf

Publication Year: 2003

Publisher

National Alliance For Model State Drug Laws
333 N Fairfax St
Suite 201
Alexandria, va 22314-2632
Phone: 703-836-6100