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Brooks Wilson's Economics Blog: A Review of Levitt’s Book Review

Thursday, December 16, 2010

A Review of Levitt’s Book Review

Steven Levitt’s “Review of Drug War Heresies by MacCoun and Reuter” published in the Journal of Economic Literature (June 2003) is a great example of a critical review by an economist.  Levitt displays good writing, knowledge of the topic, enthusiasm for good scholarship and a critical eye. 

Levitt ranks the quality of the book.
MacCoun and Reuter’s book turns out to be first-rate scholarship. It is an incredibly carefully researched, thoughtful book—far and away the best scholarship I have ever encountered on the subject. This is a book I would recommend to economists interested in researching the area, to those just generally interested in the topic, and to cocktail party bores who mindlessly preach either the necessity of legalization or the inevitability of social ruin if legalization were to occur.
A good economist must be critical, even of highly valued work.
Their conclusions are both prudently and disappointingly guarded. I cannot blame them, as scholars, for being unwilling to go far beyond their data in speculating as to what optimal drug policy should be. Nevertheless, having read this far I was hoping for more, if only so that I could criticize it as pure conjecture on their part.
Levitt discusses cocaine use and regulation to illustrate the difficult tradeoff society faces between the violence resulting from prohibition and decriminalization.  Although he discusses some costs of the War on Drugs in an earlier part of the review, but does not explicitly address cost of prohibition for cocaine; it is assumed.  He also argues that “lightly regulated decriminalization” would result in a much lower price and initial usage.  To illustrate the human cost, Levitt quotes James Q. Wilson.
…tobacco shortens one’s life, cocaine debases it. Nicotine alters one’s habits, cocaine alters one’s soul. The heavy use of  crack, unlike the heavy use of tobacco, corrodes those natural sentiments of sympathy and duty that constitute our human nature and make possible our social life…
Levitt tentatively endorses a policy recommended by Becker, Grossman, and Murphy. 
There is, however, another policy alternative advocated by Becker, Grossman, and Murphy (2002) that appears sensible from an economist’s perspective, even though it has no demonstrative proponents in the public debate: legalization accompanied by very high taxes (designed to keep the price of cocaine at or above its current full price (i.e. monetary cost plus social stigma plus criminal justice risk) and increases in expected punishment for those who attempt to circumvent the taxes by selling illegally.  Such a regime would have the benefit of keeping consumption at or below current levels, but almost certainly with less violence associated with distribution, greater government oversight, less overall government expenditure on criminal justice, and the potential to raise substantial government revenues. Such a policy is not addressed in this book, but deserves to be.
MacCoun and Reuter owe Levitt a small thank you.  Based on the review, I bought the book.

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