Drug Demand – Initiation, Continuation and Quitting

Summary As illicit drug use inflicts considerable harm on users, non-using persons and society, there is an urgent need to better understand demand. Unlawfulness and addictiveness separate the consumption of narcotic drugs from the consumption of other commodities. This paper reviews economic approaches to the task of analysing drug consumption and discusses some recent contributions to the field. We find it useful to apply a threefold division to a user’s career: the initiation phase, the continuation phase and the quitting phase. First, however, we present an analysis of drug injectors’ heroin demand based on a large set of personal interviews (n = 2882) and illustrate some of the problems affecting empirical studies in this field. An estimated price elasticity of −0.77 and income elasticity of 0.56 suggest a high level of responsiveness to economic incentives among heavy drug users.