Minimizing the social cost of drug abuse: An economic analysis of alternatives for policy

The use of heroin, with its concomitant social problems, is facilitated by an illicit market process which functions similarly to economic markets in general. The analysis of this process, incorporated in a model embodying the interacting relationships of crime generation and control, permits evaluation of three fundamentally different strategies for social control. These are controlling supply through law enforcement and other strategies, controlling demand by detaining addicts, or reducing illicit market activitity by introducing an effective substitute for the services of that market. When all the social costs of addiction are taken into account and when minimizing the total of those costs is taken to be the objective, the authors conclude that the best solution will lie with the establishment of a drug maintenance program. Properly administered, such a program would undermine the illicit market by reducing demand. Furthermore, it can be expected to reduce levels of drug related crimes and to moderate factors encouraging addiction.The authors wish to acknowledge the helpful comments of Perry Shapiro and an unnamed referee and the support of the Russell Sage Foundation during the writing of this analysis.