Bulletin

Issue: April 2005

Research in Action

Fighting heroin with economics

Harm minimization programs for addicts, coupled with appropriate penalties for remaining illegal users, may be an economically sensible approach to the heroin problem.

This possibility is the basis of a three-year research project on the public policy perspective of drug control strategies by La Trobe University economist, Professor Harry Clarke.

The Head of La Trobe’s Department of Economics and Finance, Professor Clarke is working on the project with Professor Peter Bardsley of the University of Melbourne. They have received a $$460,000 Australian Research Council Discovery Grant to investigate harm-minimization policies and the economics of controlling drug use.

‘The problem is acute,’ says Professor Clarke. ‘The last Australia-wide survey back in 1991 revealed 110,000 regular heroin users plus an additional 175,000 occasional users. In 2000 there were 7,000 arrests for heroin offences and the cost of theft, the proceeds of which were used to buy heroin, was estimated at $1.3 billion dollars.’

‘Given that the situation is of significant economic importance, we are looking to economic solutions,’ Professor Clarke said.

The research will be two pronged. The first part will involve a search of the literature and the records of treatment institutions by a La Trobe University research assistant, Ms Lee Smith.

The second will see the two researchers constructing a series of mathematical and statistical models of the policy issues dealing with drug addiction.

Both approaches will be based on economic factors. Professors Clarke and Bardsley see sensible ‘harm minimization’ policies as needing to be coupled with a policy of pursuing abstinence that penalizes illegal users.

Minimization policies include the provision of safe injection rooms, the supply of substitutes like naloxone or methadone, needle exchange programs, free heroin for addicts and reduced prosecution for users.

They stress that harm minimisation and what are termed ‘abstinence objectives’— seeking low levels of total community consumption – were competing objectives. Targeting either objective individually will reduce achievement of the other.

Their economic argument runs that drug users are doing what all consumers do – pursuing their personal objectives – to get high, blot out their problems etc. but, like all consumers pursuing their objectives, addicts are constrained by user costs. These include current and future heroin prices, legal penalties if detected, health and overdose risks and the personal cost of using a socially unacceptable substance.

While these factors may be used to discourage or inhibit drug use, forcing abstinence by increasing user costs leads to the creation of social costs such as the deteriorating health of addicts and increased property crime. Users need to steal more and tend to use harmful substitute drugs as heroin becomes more expensive.

They say adoption of a policy of harm minimization will by itself certainly reduce social costs, but it will lead to promotion of drug consumption.

Several current features of the Australian heroin market concern the researchers. They are low prices, evidence that low prices lead to greatly increased demand, easy associability of supply, increasing community ‘tolerance’ of the drug and a waning resolve to prosecute use rather than supply.

They warn that if harm minimization policies increase without an appreciation of their role in fostering increased demand, there is potential for a catastrophically worse heroin problem.

‘Unfortunately the main way abstinence is being addressed is by supply-oriented drug control policies. This is inappropriate because penalizing suppliers raises prices, thereby increasing health and crime costs,’ Professor Clarke said.

‘Users, not suppliers should be the focus of all drug control efforts. If supply policies are the main policy emphasis then drug-related crime and health problems are attributable to policy not to heroin consumption. Pursuing abstinence alone worsens things.

‘Providing heroin for addicts costs more than it saves in most situations. Providing safe injecting rooms and other harm minimization schemes eliminates addicts from the market but this in turn reduces prices and risk facing new users,’ he said.

Despite the large amount of information that will be uncovered during their three year research program, they predict there will be no simple solutions to the heroin problem.

‘Drug control policies must balance abstinence and harm minimization. The best compromise is to pursue harm minimization among addicts but to retain penalties on all remaining illegal use,’ Professor Clarke added. •

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