Conducting an economic analysis of drug use is a particularly difficult endeavor, but for Michigan State University professor and economist Siddharth Chandra, it just meant taking a look at the history books.
“You can’t simply go to Wal-Mart and look at the sticker price, and people don’t want to talk to you because drugs are illegal and they think they’ll get in trouble, ” Chandra said. “Our study is the first time the subject of how populations of consumers switch between drugs is being studied with data considered reliable.”
To find reliable economic data on drug use, Chandra, also the director of the Asian Studies Center at MSU, had to look back to early 20th century India, when the region was still part of the British Empire.
“One hundred years ago these products were legal. In British India the government was actually selling these things to the public, and they kept meticulous records,” Chandra said.
In his study – the first of its kind – Chandra pored through stacks of 100-year-old ledgers, called Excise Administration Reports, kept by the governments of the various provinces of India. Interpreting these data, he found surprising results about the economics of drug use behaviors. Despite the stark differences in the effects of opium vs. cannabis on the human body, the study shows that users would switch between the two drugs when the price of one went up – in economics, a phenomenon called substitution.
“The time, place and context are different, but the phenomenon is there. You might think consumers would treat them differently,” Chandra said. “But just because the two drugs used are very different, doesn’t mean people won’t switch.”
Opium, used legally to make the pain medicine morphine and illegally to make the drug heroin, is a highly addictive and potent depressant with potentially lethal side effects. Cannabis, also known as marijuana, is a less potent drug that produces a sense of relaxation and euphoria when used, usually through smoking or ingestion. These differences only came into consideration when analyzing cannabis in its weakest form, a drug called bhang, which consumers would not substitute for the more potent opium.
“There are many policy implications for these results,” Chandra said. “Targeting a particular drug with policies and enforcement might backfire.”
Chandra pointed to the epidemic of heroin, a product of opium that is relatively inexpensive and is devastating some communities in the United States.
“Many people know someone who has been affected by heroin – it is a very dangerous drug,” Chandra said. “But prohibiting harmful drugs selectively can be ineffective. Consumers may switch.”