The Water Bed Effect in Drug Prohibition

By Jeffrey Miron
Cato.org
Mar. 10, 2014

If you lie down on a water bed, the amount of water does not change; it just moves elsewhere.

A similar phenomenon occurs with drug prohibition; targeting one drug reduces its use, but that displaced demand shows up somewhere else.

According to a new WaPo story, this is exactly what has occurred over the past ten years with respect to prescription opiates and heroin. As enforcement cracked down on Oxycontin and similar medications, demand shifted to heroin. And since purity information is noisy for an illicit good, heroin deaths increased noticeably.

Prohibition advocates will presumably respond with calls for greater enforcement against both prescription opiates and heroin, but the right response is the opposite. While opiate use carries risks, opiate prohibition makes these worse. Higher prices caused by prohibition, for example, encourage users to inject to get a big bang for the buck. But then prohibition-induced restriction of clean syringes fosters needle-sharing, spreading HIV.

The right test for policy is never whether some good or activity is "risky," but whether government intervention reduces those risks, and at what costs. Drug prohibition fails this test.