Controlling Cocaine

For many years the U.S. government has followed its normative decision to wage a "war" on illegal drugs and thereby restrict the usage of these substances. However, what is the most effective way to reduce illegal drug usage? The Rand study, Controlling Cocaine: Supply Versus Demand examines the costs and effectiveness of several programs. With your partner, answer the following questions.
  1. What are the four interventions currently used in the cocaine market?

    2.  

     
     
     
     
     

  2. Which side of the market does each of these interventions focus on and how, at least theoretically, do they decrease drug use?

    3.  

     
     
     
     
     

  3. How much does it cost for each of these programs to reduce cocaine use by 1% in the first year? Which program appears to be most cost effective?

    4.  

     
     
     
     
     

  4. What assumptions does the study make about the price elasticity of demand for cocaine? (What effect does a 1% increase in the price of cocaine have on the consumption of cocaine?) Is this demand elastic or inelastic? Does the study's assumptions about the price elasticity of demand for cocaine agree or disagree with your expectations regarding the price elasticity of demand for this substance? Why or why not?

    5.  

     
     
     
     

  5. Does the price elasticity of demand for cocaine influence the effectiveness (in terms of both reduced consumption and reduced production) of the current government supply sided programs? Why and how?

    6.  

     
     
     

  6. Many tax payers resent that their taxes might be used for treatment programs for drug users and would prefer that these tax dollars be used for school-based drug prevention programs. The authors of Math over Myth agree that prevention programs are cost-effective, but they state that prevention is cost-effective not because it is so ______________ but because it is so ______________. How effective are school-based drug prevention programs? If school-based drug prevention programs are effective, why do these authors recommend treatment programs for drug users rather than the school-based drug prevention programs?

    7.  

     
     
     
     
     

  7. The government wants you to design a program to reduce the usage of cocaine and other such substances. What actions would you include in your program? Why? Be prepared to defend your program to the rest of the class.

    8.  

     
     
     
     
     
     
     

    When you have completed this assignment, exchange your findoings with another group. Comment on their answers to questions 5 and 7.

    McConnell Website
    Economic Links
    My Homepage
    ECO 212

    Last updated September 14, 2004

    Send comments to: jbremer@oakton.edu