In the 1800s, people in the United States could buy opioids in drugstores, and doctors routinely prescribed them. It is estimated that 1 in 200 Americans were addicted to opioids in 1895.  By the early 1900s, the federal government and state governments regulated opioids and made non-prescription use of opioids drugs illegal. The “War on Drugs” traces to efforts beginning in the Nixon Administration to reduce the trade in illegal drugs by interdicting the supply and incarcerating the suppliers. But the economics of the illegal markets makes such a war hard to win. If law enforcement agencies reduce the supply of illegal drugs, their price rise, and the quantity sold declines. However, if drug users are not very responsive to price (inelastic demand), revenue increases because the percentage increase in the price is larger than the percentage reduction in the quantity sold. More revenue means successful dealers are making more money, which attracts other criminals to the market and enhances the incentives for violence and police corruption.  

An additional economic point: “the more intense the law enforcement, the more potent the prohibited substance becomes.” During our national experiment in alcohol prohibition in the 1920s, alcohol use switched from low-alcohol beer and wine to more potent and toxic distilled spirits. Today highly concentrated, addictive, and dangerous fentanyl is replacing heroin among opioid addicts in the United States. Fentanyl accounted for over 70,000 overdose deaths in 2021.  

Many argue that other less punitive approaches to drug abuse are warranted. We are sympathetic. In 2001, Portugal decriminalized the use of drugs, but notably not the sale of drugs. It was estimated that 1% of its population was addicted to heroin. Since then, drug death rates have fallen, and drug use has declined among those under 25.  

Yet other studies suggest that harm reduction may unintentionally increase drug abuse because users are less careful when they perceive less risk. Naloxone is a medication that prevents opioid overdose deaths and is legal and available in all fifty states. However, in a detailed empirical study recently released, economists Jennifer Doleac and Anita Mukherjee conclude “…that broadened access (to Naloxone) led to more opioid-related emergency room visits and more opioid-related theft, with no measurable net reduction in opioid-related mortality.”  While the authors “emphasize strongly” that they are not calling for decreased availability of Naloxone, it is apparent that harm reduction is no silver bullet. As economists say, there are no solutions, just trade-offs.