The Laws of Supply and Demand

In research done three years ago, we considered the social costs of Australian drug policy in 1987−88. There are several components to social costs: the public expenditures by governments, the private expenditures of individual households, and the non-monetary burdens imposed on society. The earlier work attempted to estimate the public and private expenditures on the criminal-justice system and the health-care system, and the further, non-monetary net costs associated with the Australian drug laws, and argued that control and regulation was preferable to prohibition, using what economists call a cost−benefit approach, broadly related to the drug-policy analysts’ “harm reduction”. The earlier work relied on several sources for its data, and the results were dependent on the quality of this data, not always as high as that available for the supply and demand of licit drugs. In this paper we attempt to update the earlier work, with a greater focus on the laws relating to cannabis than before, when the primary interest was with heroin and other illicit opiates. The recent data on cannabis use (DHHCS, 1992) show a slight increase in the number of Australians of 14 and over who have ever used cannabis. The survey also provides data on the percentages of people who have ever been offered cannabis, those who have used cannabis in the last twelve months, and those who would try cannabis if it were offered by a “trusted friend”. The results are summarised in Table 1, together with the results from earlier surveys. The survey also provides data by sex and age group for a range of illicit (and legal) drugs. The table shows that the proportion of Australian who have ever been offered, who have ever tried, and who would try a friend’s cannabis, is stable and perhaps slightly increasing over the past six years. An additional source of information on illicit drug users — but one that is not as reliable as the survey data above — comes from the Australian Federal Police (AFP) annual survey on prices and drug seizures. The price ranges are quoted for wholesale and retail transactions by drug type. The AFP notes that “annual totals of illicit drugs seized cannot be regarded in