Panel: Projections and Puzzles about Illegal Drug Markets
(Crime & Drugs)

Friday, November 9, 2012: 9:45 AM-11:15 AM
Preston (Sheraton Baltimore City Center Hotel)

*Names in bold indicate Presenter

Organizers:  Beau Kilmer, RAND Corporation
Moderators:  Harold Pollack, University of Chicago Urban Labs
Chairs:  Mark Kleiman, University of California, Los Angeles

Should marijuana be legalized? Public opinion in the United States couldn’t be more evenly divided; the latest Gallup poll reports that exactly half of Americans say “Yes.” Several countries in Europe and Latin America are also grappling with this controversial issue. The proposed panel will provide new insights for those interested in estimating the effects of marijuana legalization as well as for those with a theoretical interest in the economics of government prohibition. The first paper of this panel will discuss whether the markets for illicit drugs are different from those for other goods and substances, such as alcohol and tobacco. In the process of making comparisons, the author will highlight a number apparent paradoxes observed in the markets for illicit drugs. For each of these puzzles, the paper offers potential explanatory factors rooted in a theory of the institutional and behavioral consequences of toughly enforced prohibition. This has important implications for understanding how illicit markets work and how they could change with legalization. The second paper focuses on what it exactly means to legalize an illicit drug. While the ballot initiatives to legalize marijuana in Colorado and Washington receive most of the media attention, there are currently more that 15 legalization initiatives and bills beings discussed in 10 states. This paper compares and contrasts these proposals, with each other, with past proposals that made it onto ballots, and with “model” approaches that have been described in the academic literature. The analysis also identifies key “design choices” that will affect outcomes, and from those choices a typology that can help clarify public debate about legalization proposals. While advocates on both sides of debate are quick to use data to make claims that legalization will be more/less beneficial than the current regime, many of these analyses are incomplete and most downplay the uncertainty associated with their estimates. The third paper argues that the benefit-cost analysis of marijuana legalization heavily relies on three factors that are not only unknown but for different reasons are also largely unknowable: how much legalization will increase marijuana use, how legalization will influence alcohol use, and the value of an hour of marijuana intoxication. This presentation highlights the difficulties associated with generating credible ranges, let alone good point estimates.

Contrasting Initiatives to Legalize Marijuana for Non-Medical Use
Jonathan Caulkins, Carnegie Mellon University

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