Tag Archives: Berkeley Economist Aaron Edline

Economists Agree – Illegality Increases the Street Price of Drugs

The University of Chicago’s Booth School of Business launched a website earlier this year titled The Initiative on Global Markets. The purpose of this website is to explore the extent to which economists agree or disagree on some of the major debates in the public policy arena. Specifically, 40 economists respond to a policy related question each week and their answers are then posted on the website.

In describing the process behind choosing the panel, the website states:

our panel was chosen to include distinguished experts with a keen interest in public policy from the major areas of economics, to be geographically diverse, and to include Democrats, Republicans and Independents as well as older and younger scholars. The panel members are all senior faculty at the most elite research universities in the United States.

This week’s question was

All else equal, making drugs illegal raises street prices for those drugs because suppliers require extra compensation for the risk of incarceration and other punishments.

93 percent of the economists on the panel either agreed or strongly agreed with this statement. Berkeley Economist Aaron Edline commented that “Illegality leads to high prices and crime.”  MIT economist Richard Schmalensee said that the answer to this question is “Basic micro” and that “Illegality also rules out some efficient forms of production & distribution.”

Other topics the questions have covered include treasury holdings, federal tax rates, voucher programs in the education system, exchange rates, stock prices, “buying American,” and healthcare.

Overall, I think this website provides a unique opportunity see where top economists stand on some important policy issues. It will be interesting to follow their answers to these weekly questions.