Monday, December 12, 2011 11:21am

Drug Use Policies

Question A: All else equal, making drugs illegal raises street prices for those drugs because suppliers require extra compensation for the risk of incarceration and other punishments.

Responses
 

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Responses weighted by each expert's confidence

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Question B: The Netherlands restrictions on “soft drugs” combined with a moderate tax aimed at deterring their consumption would have lower social costs than continuing to prohibit use of those drugs as in the US. (Click here for a summary of the Netherlands restrictions.)

Responses
 

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Responses weighted by each expert's confidence

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Question A Participant Responses

Participant University Vote Confidence Comment Bio/Vote History
Acemoglu Daron Acemoglu MIT Strongly Agree 5
Only caveat (more drugs today increase addiction, demand and prices in the future) seems insufficient to reverse basic supply-demand result.
Bio/Vote History
         
Alesina Alberto Alesina Harvard Strongly Agree 9
Bio/Vote History
         
Altonji Joseph Altonji Yale Agree 4
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Agree 5
Bio/Vote History
         
Autor David Autor MIT Strongly Agree 9
See AER paper by Carlos Dobkin and Nancy Nicosi on price effects of the U.S. government's disruption of the methamphetamine market
-see background information here
Bio/Vote History
         
Baicker Katherine Baicker Harvard Agree 3
Also depends on demand response - may be more consumers if legal, expanding demand - but that seems likely to be smaller than supply effect
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago Agree 5
Bio/Vote History
         
Chetty Raj Chetty Harvard Did Not Answer
Bio/Vote History
         
Chevalier Judith Chevalier Yale Agree 8
Price increase isn't only due to risk-- constraints on production, costs of avoiding authority all raise MC.
Bio/Vote History
         
Currie Janet Currie Princeton Agree 8
Bio/Vote History
         
Cutler David Cutler Harvard Agree 7
"All else equal" seems to imply something about taxation if legal.
Bio/Vote History
         
Deaton Angus Deaton Princeton Agree 7
Not sure what is "all things equal," such as demand being constant, taxation of legal drugs, etc.
Bio/Vote History
         
Duffie Darrell Duffie Stanford Agree 2
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Strongly Agree 10
Illegality leads to high prices and crime.
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Agree 6
Bio/Vote History
         
Fair Ray Fair Yale Agree 6
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale Agree 6
Bio/Vote History
         
Goldin Claudia Goldin Harvard Strongly Agree 8
Supply shifts to the left b/c of a host of factors including paying off authorities and related drug supply restrictions (plus added costs).
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Agree 6
Bio/Vote History
         
Greenstone Michael Greenstone Chicago Strongly Agree 8
Bio/Vote History
         
Hall Robert Hall Stanford Strongly Agree 8
I claim no expertise on this subject but the proposition is basic economics
Bio/Vote History
         
Holmström Bengt Holmström MIT Strongly Agree 10
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Strongly Agree 10
Bio/Vote History
         
Judd Kenneth Judd Stanford Strongly Agree 10
Bio/Vote History
         
Kashyap Anil Kashyap Chicago Strongly Agree 7
Basic micro economics
Bio/Vote History
         
Klenow Pete Klenow Stanford Strongly Agree 6 Bio/Vote History
         
Lazear Edward Lazear Stanford Agree 7
Quantities also adjust because of the effect on demand but the supply price is higher when drugs are illegal.
Bio/Vote History
         
Levin Jonathan Levin Stanford Agree 4
Or reduces quality. Presumably illegality also reduces demand, but assuming cost increase is the more relevant & applying Econ 1.
Bio/Vote History
         
Maskin Eric Maskin Harvard Agree 8
I'd imagine that the shorter supply of illegal drugs also makes them more expensive.
Bio/Vote History
         
Nordhaus William Nordhaus Yale Strongly Agree 9
Bio/Vote History
         
Obstfeld Maurice Obstfeld Berkeley Strongly Agree 8
Bio/Vote History
         
Rouse Cecilia Rouse Princeton Did Not Answer
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Strongly Agree 8
Bio/Vote History
         
Scheinkman José Scheinkman Princeton Strongly Agree 8
Consumers also face risk of punishment, but the evidence is that the effect on suppliers dominates - substantially raising street prices.
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Strongly Agree 8
Basic micro. Illegality also rules out some efficient forms of production & distribution.
Bio/Vote History
         
Shin Hyun Song Shin Princeton Did Not Answer
Bio/Vote History
         
Stock James Stock Harvard Agree 5
Bio/Vote History
         
Stokey Nancy Stokey Chicago Strongly Agree 8
Bio/Vote History
         
Thaler Richard Thaler Chicago Strongly Agree 10
A test of whether the panel is awake.
Bio/Vote History
         
Udry Christopher Udry Yale Agree 9
Bio/Vote History
         
Zingales Luigi Zingales Chicago Strongly Agree 10
Bio/Vote History
         

Question B Participant Responses

Participant University Vote Confidence Comment Bio/Vote History
Acemoglu Daron Acemoglu MIT Strongly Agree 5
The US war on drugs appears to be a total and very costly failure, so alternatives have to be tried and this one seems to have worked well.
Bio/Vote History
         
Alesina Alberto Alesina Harvard Strongly Agree 9
Bio/Vote History
         
Altonji Joseph Altonji Yale Agree 5
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Uncertain 3
Bio/Vote History
         
Autor David Autor MIT Strongly Agree 8
Marijuana is less dangerous than alcohol. Criminal enforcement for minor marijuana infractions is a waste of societal resources.
Bio/Vote History
         
Baicker Katherine Baicker Harvard Uncertain 2
Depends on "social costs" and how harms of drug use, effect on crime, policing efforts, tax revenue enter social welfare function.
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago Agree 5
Bio/Vote History
         
Chetty Raj Chetty Harvard Did Not Answer
Bio/Vote History
         
Chevalier Judith Chevalier Yale Uncertain 5
Too many poorly measured factors to have real certainty about this.
Bio/Vote History
         
Currie Janet Currie Princeton Uncertain 7
This is an empirical question. Depends ion how the law affects social acceptance of drugs, whether soft drugs are gateway drugs, etc.
Bio/Vote History
         
Cutler David Cutler Harvard Strongly Agree 7
Bio/Vote History
         
Deaton Angus Deaton Princeton Agree 7
Bio/Vote History
         
Duffie Darrell Duffie Stanford Uncertain 2
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Agree 10
The current regime of drug enforcement has unacceptably high cost in crime and prison
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Agree 4
Bio/Vote History
         
Fair Ray Fair Yale Agree 4
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale Agree 6
yes, especially if combined with an anti-drug campaign similar to the campaign against smoking in the U.S.
Bio/Vote History
         
Goldin Claudia Goldin Harvard Strongly Agree 8
Depends on how "moderate" the tax is.
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago No Opinion
Bio/Vote History
         
Greenstone Michael Greenstone Chicago Uncertain 2
very difficult to judge. presumably, usage would be higher. does reduced productivity of users count as a social cost?
Bio/Vote History
         
Hall Robert Hall Stanford Disagree 3
My limited understanding is that there is evidence of harm from cannabis.
Bio/Vote History
         
Holmström Bengt Holmström MIT Uncertain 2
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Uncertain 10
The evidence on this is very unclear because many of the consequences are not only hard to estimate, but hard to value. See Pudney papers..
-see background information here
-see background information here
Bio/Vote History
         
Judd Kenneth Judd Stanford Agree 7
Bio/Vote History
         
Kashyap Anil Kashyap Chicago Agree 3
Have to trade off the costs of the likely extra usage against savings from wasted resources trying to stop the inevitable.
Bio/Vote History
         
Klenow Pete Klenow Stanford Agree 3 Bio/Vote History
         
Lazear Edward Lazear Stanford Uncertain 5
Two issues confound this. The effect of lower prices and more availability on the young and drug tourism.
Bio/Vote History
         
Levin Jonathan Levin Stanford No Opinion
Must be better approaches to drug policy, but don't have an informed view on this one.
Bio/Vote History
         
Maskin Eric Maskin Harvard Agree 7
Bio/Vote History
         
Nordhaus William Nordhaus Yale Strongly Agree 9
Bio/Vote History
         
Obstfeld Maurice Obstfeld Berkeley Agree 6
Bio/Vote History
         
Rouse Cecilia Rouse Princeton Did Not Answer
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Agree 5
Bio/Vote History
         
Scheinkman José Scheinkman Princeton Agree 5
Although drug use would increase, the diminished use of violence should yield a net gain.
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Agree 3
Not at all simple: evidence weak, hard to weight various kinds of costs.
Bio/Vote History
         
Shin Hyun Song Shin Princeton Did Not Answer
Bio/Vote History
         
Stock James Stock Harvard Uncertain 1
Bio/Vote History
         
Stokey Nancy Stokey Chicago Strongly Agree 7
Bio/Vote History
         
Thaler Richard Thaler Chicago Strongly Agree 10
War on drugs dumber than invading Iraq in search of WMDs. Treat pot like booze. Would also lower prison population.
Bio/Vote History
         
Udry Christopher Udry Yale Agree 8 Bio/Vote History
         
Zingales Luigi Zingales Chicago Strongly Agree 7
Bio/Vote History
         

10 New Economic Experts join the IGM Panel


For the past two years, our expert panelists have been informing the public about the extent to which economists agree or disagree on important public policy issues. This week, we are delighted to announce that we are expanding the IGM Economic Experts Panel to add ten new distinguished economists. Like our other experts, these new panelists have impeccable qualifications to speak on public policy matters, and their names will be familiar to other economists and the media.

To give the public a broad sense of their views on policy issues, each new expert has responded to a selection of 16 statements that our panel had previously addressed. We chose these 16 statements, which cover a wide range of important policy areas, because the original panelists' responses to them were analyzed in a paper comparing the views of our economic experts with those of the American public. You can find that paper, by Paola Sapienza and Luigi Zingales, here. The paper, along with other analyses of the experts' views, was discussed during the American Economic Association annual meetings, and the video can be found here.

The new panelists' responses to these statements can be seen on their individual voting history pages. Our ten new economic experts are:

Abhijit Banerjee (MIT)
Markus K. Brunnermeier (Princeton)
Liran Einav (Stanford)
Amy Finkelstein (MIT)
Oliver Hart (Harvard)
Hilary Hoynes (Berkeley)
Steven N. Kaplan (Chicago)
Larry Samuelson (Yale)
Carl Shapiro (Berkeley)
Robert Shimer (Chicago)


Please note that, for the 16 previous topics on which these new panelists have voted, we left the charts showing the distribution of responses unchanged. Those charts reflect the responses that our original panelists gave at the time, and we have not altered them to reflect the views of the new experts.

We have also taken this opportunity to ask our original panelists whether they would vote differently on any of the statements we have asked about in the past. Several experts chose to highlight statements to which they would currently respond differently. In such cases, you will see this "revote" below the panelist's original vote. We think you will enjoy seeing examples of statements on which some experts have reconsidered.

As with the 16 previous statements voted on by new panelists, these "revote" responses are not reflected in the chart that we display showing the distribution of views for that topic: all the charts for previous questions reflect the distribution of views that the experts expressed when the statement was originally posed.

About the IGM Economic Experts Panel

This panel explores the extent to which economists agree or disagree on major public policy issues. To assess such beliefs we assembled this panel of expert economists. Statistics teaches that a sample of (say) 40 opinions will be adequate to reflect a broader population if the sample is representative of that population.

To that end, our panel was chosen to include distinguished experts with a keen interest in public policy from the major areas of economics, to be geographically diverse, and to include Democrats, Republicans and Independents as well as older and younger scholars. The panel members are all senior faculty at the most elite research universities in the United States. The panel includes Nobel Laureates, John Bates Clark Medalists, fellows of the Econometric society, past Presidents of both the American Economics Association and American Finance Association, past Democratic and Republican members of the President's Council of Economics, and past and current editors of the leading journals in the profession. This selection process has the advantage of not only providing a set of panelists whose names will be familiar to other economists and the media, but also delivers a group with impeccable qualifications to speak on public policy matters.

Finally, it is important to explain one aspect of our voting process. In some instances a panelist may neither agree nor disagree with a statement, and there can be two very different reasons for this. One case occurs when an economist is an expert on a topic and yet sees the evidence on the exact claim at hand as ambiguous. In such cases our panelists vote "uncertain". A second case relates to statements on topics so far removed from the economist's expertise that he or she feels unqualified to vote. In this case, our panelists vote "no opinion".

The Economic Experts Panel questions are emailed individually to the members of the panel, and each responds electronically at his or her convenience. Panelists may consult whatever resources they like before answering.

Members of the public are free to suggest questions (see link below), and the panelists suggest many themselves. Members of the IGM faculty are responsible for deciding the final version of each week’s question. We usually send a draft of the question to the panel in advance, and invite them to point out problems with the wording if they see any. In response, we typically receive a handful of suggested clarifications from individual experts. This process helps us to spot inconsistencies, and to reduce vagueness or problems of interpretation.

The panel data are copyrighted by the Initiative on Global Markets and are being analyzed for an article to appear in a leading peer-reviewed journal.

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