Controlling, Modeling, Consensus, and Substance Use(r) Policy Intervention: Unfinished Business

Abstract

This article looks at certain aspects of unfinished business in substance use policy from the economist's perspective. It takes the view that in tackling a policy issue such as cigarette smoking, it is likely to be necessary to use a portfolio of policy tools, rather than on just one tool, and that it is likely to be necessary to accept that complete elimination of the activity being considered will almost certainly cost more than it is worth—we will probably always have to live with some nonzero level of such activities.

Keywords:

• externalities
• prohibition
• Pigovian taxes
• Coase theorem
• second-best

THE AUTHORS

GLOSSARY

• Coase Theorem: The theoretical basis for an alternative to Pigovian Taxes to dealing with externalities. Based on assignment of property rights. Named after American economist Ronald Coase.

• Elasticity: A unit-free measure of responsiveness. Price elasticity of demand is defined as the percentage change in quantity demanded in response to a one per cent change in price.

• Externality: A cost created by the actions of one individual but borne by another. Requiring the first individual to bear the cost of his action is referred to as requiring him to internalize the externality.

• Macroeconomics: The study of the economy as a whole.

• Microeconomics: The study of the economic behavior of individuals and of the markets for individual commodities.

• Pigovian Tax: A tax imposed upon the producer of an externality with the intent of forcing him to internalize the externality. Named after British economist Arthur Cecil Pigou.

Notes

¹ Models that spell out in detail how certain parts of the economy are hypothesized to operate. Ideally, the data should allow us to test all of those hypotheses jointly. In practice it virtually never does.

² The study of the economy as a whole, as distinct from microeconomics, which focuses on modeling individual economic behavior and the markets for individual commodities. The demand for certain substances is considered under microeconomics, the way widespread consumption of those substances could affect the growth of the economy in aggregate would be tacked using macroeconomic models. Some topics–unemployment, for example–span both micro- and macroeconomics.

³ Elasticity is a unit-free measure of responsiveness. When we are looking at the demand for alcohol, for example, we can discuss its responsiveness to price in terms of how many fewer liters of wine individuals drink when the price goes up by $1.00 per liter or, to allow comparison across studies that use different currencies and units of quantity, in terms of the price elasticity of demand, which shows the percentage change in quantity demanded in response to a 1% increase in price.

⁴ One of the easiest ways to start an argument among substance misuse researchers is to cite the Becker-Murphy economic model of rational addiction (Becker & Murphy, 1988).

⁵ The reader is invited to consider the implications of formal as well as informal interventions when “drugs” have been defined differentially by a range of influential individuals and systemic stakeholders, as social substances by society, as sacramental substances by organized religions, as medicines and healing agents by a range of “treaters,” as commodities by economists, as dangerous substances by a range of control agents and politicians, etc. Editor's note.

⁶ One case in which zero can be regarded as optimal comes from what might be regarded as an example of drug misuse, although not of the type usually considered in this journal. Drug resistance in bacteria arises from the overuse of antibiotics—a case in which the individual is not recognizing the cost he is imposing on society by using antibiotics unnecessarily—but in that case, once a course of the drug has started, it is optimal to take the whole course, with an eye to reducing the population of a particular bacteria in that individual's body to zero, to prevent the emergence of a resistant strain in that individual. In that case, of course, we can characterize the individual's contribution to the emergence of drug resistance as another form of negative externality.

⁷ Arthur Cecil Pigou (1877–1959). Professor of political economy at Cambridge University, 1908–1943. Regarded as a founder of modern welfare economics.

⁸ Ronald Coase (1920–2013), Nobel Prize in Economics, 1991.

⁹ And, of course, by buying smuggled cigarettes.

¹⁰ The reader is referred to the challenging thesis by Rittel and Webber (1973) who suggested that problems can and should be usefully categorized into two types: “tame problems” and “wicked problems.” The former are solved in a linear, traditional known and tried “water fall paradigm;” gather data, analyze data, formulate solution, implement solution. The latter “wicked problems” can only be responded to individually, each time a new, with no ultimate, repeatable solution. “Substance misuse,” however defined is a “wicked problem” and irresolvable problem from this perspective.

The thesis by the cyberneticist Heinz Von Foerster (Von Foerster, Mora, & Amiot, 1960) also challenges consensualized “evidence making.” He posited that there are two types of generic questions: legitimate and illegitimate ones. The former are those for which the answer is not known and is, perhaps, even unknowable during a given state of knowledge and technology and which is associated with knowledge breakthroughs—the effective control of man's “appetite” for a range of psychoactive substances, whatever their legal status. An illegitimate question is one for which the answer is known, or, at the very least consensualized. The asking of illegitimate questions has been, and remains, by and large, the acculturated norm. The reader is referred to Pablo Neruda's The Book of Questions for a poetic exploration of legitimate questions. Editor's note.

¹¹ In The Theory of Moral Sentiments, Adam Smith's first book and a book which is much less well known today that his Wealth of Nations, but the book which made his name as a moral philosopher in his own day.

¹² A proviso made harder to guarantee by the way many American state governments handled the funds which they derived from the Master agreement with the tobacco companies (Sloan, Allsbrook, Madre, Masselink, & Mathews, 2005).

¹³ In this regard note St. Thomas Aquinas's justification in the Summa Theologica for tolerating sins which would seem to be outlawed by the divine law. In essence, he argued that complete adherence to the divine law is beyond human capability, and that to try to enforce it absolutely would lead to a breakdown of society, making everybody worse off, including those who most wanted to help, and therefore that it was worth putting up with the charging of interest on loans. Arguably the Rabbi Hillel had the same notion in mind when he instituted the Prosbul. (Jewish Encyclopedia, 1906 edn.).

¹⁴ And at other times (Healy, 2015).

Additional information

Notes on contributors

Brian Ferguson

Brian Ferguson, PhD, Canada, is a professor of economics in the Department of Economics and Finance at the University of Guelph, in Guelph, Ontario, Canada. His work in health economics has included research on physician behavior, health expenditure, and demand for alcohol and tobacco. His current research interests include applications of formal techniques of theoretical and econometric dynamic economic analysis to health. He is a Faculty Associate of the Canadian Centre for Health Economics.