{"id":52,"date":"2025-05-06T09:33:42","date_gmt":"2025-05-06T13:33:42","guid":{"rendered":"https:\/\/people.bsu.edu\/econbriefs\/?p=52"},"modified":"2025-05-06T09:33:42","modified_gmt":"2025-05-06T13:33:42","slug":"fentanyl-and-the-economics-of-inelastic-demand-by-dr-cecil-bohanon-and-dr-john-horowitz","status":"publish","type":"post","link":"https:\/\/people.bsu.edu\/econbriefs\/2025\/05\/06\/fentanyl-and-the-economics-of-inelastic-demand-by-dr-cecil-bohanon-and-dr-john-horowitz\/","title":{"rendered":"Fentanyl and the Economics of Inelastic Demand \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz"},"content":{"rendered":"<p><span data-contrast=\"auto\">In 2022, over 109,000 people died from drug overdoses, many from fentanyl. Preliminary data suggests this may have <\/span><a href=\"https:\/\/www.cdc.gov\/nchs\/nvss\/vsrr\/drug-overdose-data.htm\"><span data-contrast=\"none\">leveled off in 2023 but still exceeds an annual rate of 106,000<\/span><\/a><span data-contrast=\"auto\"> deaths. Since the early 1900s, states and the Federal government have regulated opioids and outlawed non-prescription 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.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559740&quot;:480}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">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.\u00a0\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559740&quot;:480}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">More enforcement aimed at reducing illegal drug supply also <\/span><a href=\"https:\/\/www.cato.org\/policy-analysis\/alcohol-prohibition-was-failure#the-iron-law-of-prohibition\"><span data-contrast=\"none\">tends to make addictive substances more potent<\/span><\/a><span data-contrast=\"none\">,<\/span><span data-contrast=\"auto\"> 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 <\/span><a href=\"https:\/\/nymag.com\/intelligencer\/2022\/12\/sam-quinones-on-meth-fentanyl-and-homelessness.html\"><span data-contrast=\"none\">addicts are using more addictive and highly concentrated fentanyl rather than heroin.<\/span><\/a><span data-contrast=\"auto\">\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559740&quot;:480}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">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, <\/span><a href=\"https:\/\/time.com\/longform\/portugal-drug-use-decriminalization\/\"><span data-contrast=\"none\">Portugal decriminalized drug use<\/span><\/a><span data-contrast=\"auto\">. Since then, drug-related death rates have fallen, and fewer people under 25 are using drugs.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559740&quot;:480}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">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. <\/span><a href=\"https:\/\/www.city-journal.org\/article\/this-is-your-city-on-fentanyl\"><span data-contrast=\"none\">Nearly 60 percent of the 16,000 clients at one agency received harm-reduction services, like needle exchanges or naloxone, while less than 1 percent received treatment.<\/span><\/a><span data-contrast=\"auto\"> 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 non-prescription use over 100 years ago. Decriminalization is no panacea.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559740&quot;:480}\">\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In 2022, over 109,000 people died from drug overdoses, many from fentanyl. Preliminary data suggests this may 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 non-prescription use because of concerns about addiction and abuse. Law [&hellip;]<\/p>\n","protected":false},"author":112,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[120],"tags":[141,554,551,552,124,147,125,138,142,131,347,555,140,537,553],"class_list":["post-52","post","type-post","status-publish","format-standard","hentry","category-health-economics","tag-decriminalization","tag-demand","tag-drug","tag-drug-abuse","tag-drug-addiction","tag-economics","tag-federal-government","tag-fentanyl","tag-harm-reduction","tag-inelastic-demand","tag-milton-friedman","tag-moral-hazard","tag-overdose","tag-policymaker","tag-price"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Fentanyl and the Economics of Inelastic Demand \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz - Econ Briefs<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/people.bsu.edu\/econbriefs\/2025\/05\/06\/fentanyl-and-the-economics-of-inelastic-demand-by-dr-cecil-bohanon-and-dr-john-horowitz\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Fentanyl and the Economics of Inelastic Demand \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz - Econ Briefs\" \/>\n<meta property=\"og:description\" content=\"In 2022, over 109,000 people died from drug overdoses, many from fentanyl. 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