Prohibition or Regulation: An Economist's View of Australian Heroin Policy

Abstract

CONCERN for the spread of HIV infection and with the growing social costs associated with the policy of heroin prohibition have recently led many to reconsider the policy. A large question facing advocates of decriminalisation or legalisation is to what extent the numbers of users would grow under a more regulated scheme. More regulated because under prohibition there is a completely unregulated market, which is, however, illegal: lawless laissez-faire. This paper advocates some degree of regulation for the supply of heroin, and abandonment of the unsuccessful policy of prohibition. In attempting to answer the question of the numbers of users under a different regime¿and their importance to society¿the paper closely examines the structure of the black market, using a previously unpublished survey of the illegal industry performed in Victoria some years ago by the illicit industry itself. This confirms recent findings that there are relatively large numbers of occasional users who seldom come to the attention of medical or law-enforcement authorities, and whose heroin use per se imposes little cost on society.

Keywords: distribution black market survey, heroin, illicit drug policy

JEL Classification: L59, K14, D40