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Rethinking America's Illegal Drug Policy


  • John J. Donohue III
  • Benjamin Ewing
  • David Peloquin


This paper provides a critical review of the empirical and theoretical literatures on illegal drug policy, including cross-country comparisons, in order to evaluate three drug policy regimes: criminalization, legalization and "depenalization." Drawing on the experiences of various states, as well as countries such as Portugal and the Netherlands, the paper attempts to identify cost-minimizing policies for marijuana and cocaine by assessing the differing ways in which the various drug regimes would likely change the magnitude and composition of the social costs of each drug. The paper updates and evaluates Jeffrey Miron's 1999 national time series analysis of drug prohibition spending and the homicide rate, which underscores the lack of a solid empirical base for assessing the theoretically anticipated crime drop that would come from drug legalization. Nonetheless, the authors conclude that given the number of arrests for marijuana possession, and the costs of incarceration and crime systemic to cocaine criminalization, the current regime is unlikely to be cost-minimizing for either marijuana or cocaine.

Suggested Citation

  • John J. Donohue III & Benjamin Ewing & David Peloquin, 2011. "Rethinking America's Illegal Drug Policy," NBER Working Papers 16776, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:16776
    Note: LE

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    References listed on IDEAS

    1. DiNardo, John & Lemieux, Thomas, 2001. "Alcohol, marijuana, and American youth: the unintended consequences of government regulation," Journal of Health Economics, Elsevier, vol. 20(6), pages 991-1010, November.
    2. Robert MacCoun & Peter Reuter & Thomas Schelling, 1996. "Assessing alternative drug control regimes," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 15(3), pages 330-352.
    3. Rosalie Liccardo Pacula & Jamie F. Chriqui & Joanna King, 2003. "Marijuana Decriminalization: What does it mean in the United States?," NBER Working Papers 9690, National Bureau of Economic Research, Inc.
    4. Douglas Eckberg, 1995. "Estimates of early twentieth-century U.S. homicide rates: An econometric forecasting approach," Demography, Springer;Population Association of America (PAA), vol. 32(1), pages 1-16, February.
    5. Rosalie Liccardo Pacula & Beau Kilmer, 2003. "Marijuana and Crime: Is there a Connection Beyond Prohibition?," NBER Working Papers 10046, National Bureau of Economic Research, Inc.
    6. MacCoun Robert & Pacula Rosalie Liccardo & Chriqui Jamie & Harris Katherine & Reuter Peter, 2009. "Do Citizens Know Whether Their State Has Decriminalized Marijuana? Assessing the Perceptual Component of Deterrence Theory," Review of Law & Economics, De Gruyter, vol. 5(1), pages 347-371, June.
    7. Angela K. Dills & Jeffrey A. Miron & Garrett Summers, 2010. "What Do Economists Know about Crime?," NBER Chapters,in: The Economics of Crime: Lessons for and from Latin America, pages 269-302 National Bureau of Economic Research, Inc.
    8. Louis Kaplow, 2004. "On the (Ir)Relevance of Distribution and Labor Supply Distortion to Government Policy," Journal of Economic Perspectives, American Economic Association, vol. 18(4), pages 159-175, Fall.
    9. Gary S. Becker & Kevin M. Murphy & Michael Grossman, 2006. "The Market for Illegal Goods: The Case of Drugs," Journal of Political Economy, University of Chicago Press, vol. 114(1), pages 38-60, February.
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    1. repec:aea:aejapp:v:9:y:2017:i:4:p:30-57 is not listed on IDEAS
    2. Alex Tabarrok, 2016. "Lessons from the Economics of Crime: What Reduces Offending? , by P. J. Cook , S. Machin , O. Marie and G. Mastrobuoni (eds) ( The MIT Press , Cambridge, Massachusetts , 2013 ), pp. 240 ," The Economic Record, The Economic Society of Australia, vol. 92(298), pages 501-503, September.
    3. Kelly, Elaine & Rasul, Imran, 2014. "Policing cannabis and drug related hospital admissions: Evidence from administrative records," Journal of Public Economics, Elsevier, vol. 112(C), pages 89-114.
    4. Ariaster B. Chimeli & Rodrigo R. Soares, 2017. "The Use of Violence in Illegal Markets: Evidence from Mahogany Trade in the Brazilian Amazon," American Economic Journal: Applied Economics, American Economic Association, vol. 9(4), pages 30-57, October.
    5. repec:eee:pubeco:v:154:y:2017:i:c:p:67-94 is not listed on IDEAS
    6. Hefei Wen & Jason M. Hockenberry & Janet R. Cummings, 2014. "The Effect of Substance Use Disorder Treatment Use on Crime: Evidence from Public Insurance Expansions and Health Insurance Parity Mandates," NBER Working Papers 20537, National Bureau of Economic Research, Inc.

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    JEL classification:

    • K0 - Law and Economics - - General


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