Estimated optimal drug law enforcement expenditures based on U.S. annual data
This research develops and implements a simple model for the determination of optimal national expenditures on drug law enforcement. The key components of the model are an econometrically estimated linear drug violations equation relating drug violations to drug enforcement expenditures and other factors, a parameter measuring per capita costs of drug violations, and a Cobb-Douglas function relating social welfare to: (1) net consumption after drug costs and drug enforcement expenditures, and (2) benefits to users of illegal drugs. The parameters of the model are estimated from annual time series data for the United States from 1981 through 2007. It is determined that if the parameters of the social welfare function are such that the elasticity of social welfare with respect to net consumption (α) is near to unity and the elasticity of social welfare with respect to user benefits (β) is near to zero, the estimated optimal expenditures on drug law enforcement are in the vicinity of the actual expenditures. However, comparative statics analysis of the optimum demonstrates two situations in which significantly reduced expenditures might be indicated: (1) if the α parameter in the social welfare function is significantly below unity and/or the β parameter is significantly above zero; (2) if the drug cost parameter δ is in fact significantly less than estimates based on 1992–2002 data. The latter possibility might be the more relevant, because it seems more likely that society might be incorrectly estimating the costs of drug use (a positive issue) than that society is misperceiving its social welfare values (a normative issue).
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Sylvaine Poret, 2005.
"An Optimal Anti-Drug Law Enforcement Policy,"
2005-17, Centre de Recherche en Economie et Statistique.
- Baveja, A. & Feichtinger, G. & Hartl, R.F. & Haunschmied, J.L. & Kort, P.M., 1999.
"A Resource-Constrained Optimal Control Model for Crackdown on Illicit Drug Markets,"
1999-85, Tilburg University, Center for Economic Research.
- Baveja, A. & Feichtinger, G. & Hartl, R.F. & Haunschmied, J.L. & Kort, P.M., 2000. "A resource-constrained optimal control model for crackdown on illicit drug markets," Other publications TiSEM 15ffe163-821b-458a-80ef-d, Tilburg University, School of Economics and Management.
- Jim Leitzel & Erik Weisman, 1999. "Investing in Policy Reform," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 155(4), pages 696-, December.
- Grossman, Michael & Chaloupka, Frank J., 1998.
"The demand for cocaine by young adults: a rational addiction approach,"
Journal of Health Economics,
Elsevier, vol. 17(4), pages 427-474, August.
- Michael Grossman & Frank J. Chaloupka & Charles C. Brown, 1996. "The Demand for Cocaine by Young Adults: A Rational Addiction Approach," NBER Working Papers 5713, National Bureau of Economic Research, Inc.
- Mark Thornton, 2004. "Prohibition vs. Legalization: Do Economists Reach a Conclusion on Drug Policy?," Econ Journal Watch, Econ Journal Watch, vol. 1(1), pages 82-105, April.
- Frank J. Chaloupka & Michael Grossman & John A. Tauras, 1999.
"The Demand for Cocaine and Marijuana by Youth,"
in: The Economic Analysis of Substance Use and Abuse: An Integration of Econometrics and Behavioral Economic Research, pages 133-156
National Bureau of Economic Research, Inc.
- Saffer, Henry & Chaloupka, Frank, 1999.
"The Demand for Illicit Drugs,"
Western Economic Association International, vol. 37(3), pages 401-11, July.
- David L. Sollars & Bruce L. Benson & David W. Rasmussen, 1994. "Drug Enforcement and the Deterrence of Property Crime Among Local Jurisdictions," Public Finance Review, , vol. 22(1), pages 22-45, January.
- Gary S. Becker & Kevin M. Murphy & Michael Grossman, 2004. "The Economic Theory of Illegal Goods: The Case of Drugs," NBER Working Papers 10976, National Bureau of Economic Research, Inc.
- Niskanen, William A., 1992. "Economists and drug policy," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 36(1), pages 223-248, July.
- Horowitz J.L., 2001. "Should the DEAs STRIDE Data Be Used for Economic Analyses of Markets for Illegal Drugs?," Journal of the American Statistical Association, American Statistical Association, vol. 96, pages 1254-1271, December.
- Bruno S. Frey, 1997. "Drugs: Drugs, economics and policy," Economic Policy, CEPR;CES;MSH, vol. 12(25), pages 387-398, October.
- Sheng-Wen Chang & N. Edward Coulson & Ping Wang, 2002. "Optimal Drug Policy in Low-Income Neighborhoods," NBER Working Papers 9248, National Bureau of Economic Research, Inc.
- Jeff Desimone, 2006. "The Relationship Between Illegal Drug Prices At The Retail User And Seller Levels," Contemporary Economic Policy, Western Economic Association International, vol. 24(1), pages 64-73, 01.
- Bruce L. Benson & David W. Rasmussen, 1991. "Relationship Between Illicit Drug Enforcement Policy And Property Crimes," Contemporary Economic Policy, Western Economic Association International, vol. 9(4), pages 106-115, October.
- Andrew Resignato, 2000. "Violent crime: a function of drug use or drug enforcement?," Applied Economics, Taylor & Francis Journals, vol. 32(6), pages 681-688.
- Jeff DeSimone & Matthew C. Farrelly, .
"Price and Enforcement Effects on Cocaine and Marijuana Demand,"
0101, East Carolina University, Department of Economics.
- Jeff DeSimone & Matthew C. Farrelly, 2003. "Price and Enforcement Effects on Cocaine and Marijuana Demand," Economic Inquiry, Western Economic Association International, vol. 41(1), pages 98-115, January.
- Garoupa, Nuno, 1997. "Optimal law enforcement and the economics of the drug market: Some comments on the Schengen Agreements," International Review of Law and Economics, Elsevier, vol. 17(4), pages 521-535, December.
When requesting a correction, please mention this item's handle: RePEc:eee:jpolmo:v:34:y:2012:i:3:p:356-371. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If references are entirely missing, you can add them using this form.