Person:

Miron, Jeffrey

This paper explains how economists think about government policy toward illegal drugs. The economics perspective suggests that rational discussion of drug policy must address two distinct questions. The first is whether policy should attempt to reduce drug use; the second is whether prohibition is a good method of reducing drug use, should that goal be desirable. Economic reasoning suggests that reducing drug use is not necessarily a compelling goal for policy, although it does not rule out that perspective. Economic reasoning also suggests that prohibition is an inefficient method for reducing drug use – assuming that goal is taken as given – except under conditions that do not appear consistent with existing evidence.

The effect of drug prohibition on drug consumption is a critical issue in debates over drug policy. One episode that provides information on the consumption-reducing effect of drug prohibition is the Chinese legalization of opium in 1858. In this paper we examine the impact of China's opium legalization on the quantity and price of British opium exports from India to China during the 19th century. We find little evidence that legalization increased exports or decreased price. Thus, the evidence suggests China's opium prohibition had a minimal impact on opium consumption.

The minimum legal drinking age (MLDA) is widely believed to save lives by reducing traffic fatalities among underage drivers. Further, the Federal Uniform Drinking Age Act, which pressured all states to adopt an MLDA of 21, is regarded as having contributed enormously to this life-saving effect. This article challenges both claims. State-level panel data for the past 30 yr show that any nationwide impact of the MLDA is driven by states that increased their MLDA prior to any inducement from the federal government. Even in early-adopting states, the impact of the MLDA did not persist much past the year of adoption. The MLDA appears to have only a minor impact on teen drinking. (JEL H11, K42).