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In 2022, over 109,000 people died in the United States from drug overdoses, many from fentanyl. Preliminary data suggests this might have leveled off in 2023 but still exceeds an annual rate of 106,000 deaths.
Since the early 1900s, states and the federal government have regulated opioids and outlawed nonprescription use because of concerns about addiction and abuse. Law enforcement has emphasized reducing the supply of illegal drugs, which is designed to raise prices and lower the amount available.
Unfortunately, addicted people are not very responsive to price, or in economic jargon, their demand is inelastic. With inelastic demand, higher prices reduce use, but drug users have to spend more for their drugs. Drug sellers, at least those who avoid law enforcement, earn more revenue and profits when drug interdiction is successful. In addition, addicts often commit more crimes to pay for their increasingly costly habit.
More enforcement aimed at reducing illegal drug supply also tends to make addictive substances more potent, concentrated and toxic. Expected gains to criminals rise when each cargo of illicit substances is more valuable. During Prohibition in the 1920s, people started consuming more distilled alcohol rather than beer and wine. Currently, opioid addicts are using more addictive and highly concentrated fentanyl rather than heroin.
At least since the time of Milton Friedman, many economists and public health professionals have urged policymakers to consider addiction more as a public health issue than a law-enforcement problem. For example, in 2001, Portugal decriminalized drug use. Since then, drug-related death rates have fallen, and fewer people under 25 are using drugs.
Since 2021, Oregon has decriminalized drug use, but few think the policy is a success. Oregon issues citations that fine users $100. The fine is waived if the user calls a drug help hotline. But the fines are unenforceable, and few users call the hotline. Drug users now openly use drugs in public spaces at all times of the day and night. Drug paraphernalia and human feces often litter the streets.
Oregon also promotes harm reduction. Nearly 60% of the 16,000 clients at one agency received harm-reduction services, like needle exchanges or naloxone, while less than 1% received treatment. When drug use is safer and, in effect, legal, we expect to see more of it. So yet another economic principle, moral hazard, comes into play. Moral hazard motivated policymakers to outlaw nonprescription use over 100 years ago. Decriminalization is no panacea.•
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Bohanon and Horowitz are professors of economics at Ball State University. Send comments to ibjedit@ibj.com.
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