Illegal drug use and the economic recession--what can we learn from the existing research?

BACKGROUND

Much research on the use of amphetamine, cocaine and heroin employs individual level data and analyses variations in drug use by factors like personal characteristics, socioeconomic factors, and the social environment. Less attention is given to how these individual responses inter-relate with key macroeconomic variables. From a drug policy perspective however, it is important to also understand the consequences for drug use and drug users of changes in the macroeconomic conditions. As the world is experiencing an economic recession one would like to know whether it will affect the number of drug users and/or consumption frequency and volume amongst established users.

METHODS

There are different channels through which a recession could influence drug consumption; here the main focus is on how an economic downturn may influence drug prices and drug users' incomes. We briefly refer to relevant economic theory before reviewing the research literature.

RESULTS

A fall in drug prices and income seem likely. Empirical studies confirm drug users' price responsiveness. Only a few studies have dealt with income elasticity amongst this group.

CONCLUSION

As the price and the income effect may pull in opposite directions, the full effect on drug use is difficult to predict. Still, it seems likely that an economic downturn of the current magnitude could increase the use of drugs.