The Portuguese Puzzle: Decriminalization of Drugs and Drug Usage By David Henderson

In 2009, Glenn Greenwald wrote, for the Cato Institute, a study of the effects of drug decriminalization in Portugal. Among his findings were that drug usage actually decreased among various populations.

Greenwald writes:

In fact, for those two critical groups of youth (13-15 years and 16-18 years), prevalence rates have declined for virtually every substance since decriminalization (see Figures 4 and 5). For some older age groups (beginning with 19- to 24-year-olds), there has been a slight to mild increase in drug usage, generally from 2001 to 2006, including a small rise in the use of psychoactive substances for the 15-24 age group, and a more substantial increase in the same age group for illicit substances generally.

I was quite surprised.

The decrease among the very young did not completely surprise me. When I give talks on the drug war, I point out that there are two contrary effects on drug usage of reducing the penalties for using illegal drugs. The reduced penalties cause the price to be lower, thus moving people down a given demand curve and increasing the amount consumed. But the simply fact of decriminalization makes illegal drugs less of a “forbidden fruit,” causing a downward shift in the demand curve. I point out that we don’t know a priori which effect dominates, but that my gut feel is that the price effect dominates, leading to more consumption. I do point out, though, that the forbidden fruit effect is likely to be stronger for younger people and I illustrate by singing a few bars from a song my mother taught me about not putting “beans in my ears.” That is why Greenwald’s data showing that usage by the young declined is not totally surprising.

But the fact that usage increased only a little among 19 to 24 year olds did surprise me. I would have expected a much bigger effect of price.

I should note that I’m using the word “price” in a more-inclusive way than the usual. The price includes not just the cash outlay per unit but also the legal risk that comes with buying and using. Decriminalization would cause this legal risk to fall substantially, thus reducing the price.

But what if much of illegal drug use is a response to isolation? Then imposing harsh penalties can actually shift the demand curve higher because criminalization results in isolation. In that case, decriminalization would shift the demand curve lower not just for the youngest but for everyone.

That’s the point of a recent article at the Huffington Post. Of course the author does not put it in terms of demand curves and movements along demand curves. But that’s what’s going on.

An excerpt from Johann Hari, “The Likely Cause of Addiction Has Been Discovered, and It Is Not What You Think:”

One of the ways this theory [that drugs cause addiction] was first established is through rat experiments–ones that were injected into the American psyche in the 1980s, in a famous advert by the Partnership for a Drug-Free America. You may remember it. The experiment is simple. Put a rat in a cage, alone, with two water bottles. One is just water. The other is water laced with heroin or cocaine. Almost every time you run this experiment, the rat will become obsessed with the drugged water, and keep coming back for more and more, until it kills itself. The advert explains: “Only one drug is so addictive, nine out of ten laboratory rats will use it. And use it. And use it. Until dead. It’s called cocaine. And it can do the same thing to you.” But in the 1970s, a professor of Psychology in Vancouver called Bruce Alexander noticed something odd about this experiment. The rat is put in the cage all alone. It has nothing to do but take the drugs. What would happen, he wondered, if we tried this differently? So Professor Alexander built Rat Park. It is a lush cage where the rats would have colored balls and the best rat-food and tunnels to scamper down and plenty of friends: everything a rat about town could want. What, Alexander wanted to know, will happen then? In Rat Park, all the rats obviously tried both water bottles, because they didn’t know what was in them. But what happened next was startling. The rats with good lives didn’t like the drugged water. They mostly shunned it, consuming less than a quarter of the drugs the isolated rats used. None of them died. While all the rats who were alone and unhappy became heavy users, none of the rats who had a happy environment did.

OK, so that was about rats. What about humans? Hari continues:

At first, I thought this was merely a quirk of rats, until I discovered that there was–at the same time as the Rat Park experiment–a helpful human equivalent taking place. It was called the Vietnam War. Time magazine reported using heroin was “as common as chewing gum” among U.S. soldiers, and there is solid evidence to back this up: some 20 percent of U.S. soldiers had become addicted to heroin there, according to a study published in the Archives of General Psychiatry. Many people were understandably terrified; they believed a huge number of addicts were about to head home when the war ended. But in fact some 95 percent of the addicted soldiers–according to the same study–simply stopped. Very few had rehab. They shifted from a terrifying cage back to a pleasant one, so didn’t want the drug any more.

The bottom line: Legalizing drugs could well reduce the demand for all age groups. The Portuguese puzzle is not so puzzling.

HT to Todd Zywicki.