Drugs of Choice

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In my previous newsletter, I asked whether Narcan saves lives. The basic price theoretic point is that Narcan reduces the cost of using opioids. Thus, some of the reduction in cost accrues to drug users who will get more enjoyment from increased consumption of opioids. The question is how much of the benefits accrue to drug users in the form of enjoyment in comparison to the benefits from the reduction of opioid-related overdose deaths. What I pointed out is that the magnitude of these benefits are related. The more lives saved, the less of the benefit that accrues to drug users as a result of additional consumption. The fewer lives saved, the greater the benefit to drug users from additional consumption. How these benefits are distributed depends on the price elasticity of demand for opioids.This ruffled some feathers. Some people contacted me to tell me that the post was silly. We cannot use price theory to explain drug use, they said, because drug users aren’t rational. These are not people moving along a demand curve. Their behavior is erratic. Some criticized me for ignoring actual price elasticities of demand to downplay the success of Narcan. Others told me that I was ignoring the psychology of drug users. Still others noted that addiction is a biological condition, detached from economic incentives.I reject all these criticisms.First, I never assumed that drug users are rational. They need not be rational for the theory to apply. Price theory is about applying rational frameworks (not rational people) to explain human behavior. It does not require understanding what…