This paper presents a review of the recent economics literature in the area of illicit drug use. Particular attention is paid to the economics of addiction and the rational addiction model, the welfare economics framework for analysing the social costs of drug use, and the attempts that have been made by economists to evaluate recent or proposed policy interventions. A dominant them e in this review is the problem of poor data availability. This is particularly true when it comes to implementing the Rational Addiction model, but it is also apparent in the literature on estimating the costs of illicit drug use to society as a whole. One of the main conclusions of this review is that until recently public policy has not been particularly influenced by research carried out by economists. It is not clear whether this is because economists have had to grapple with inadequate data, and hence their conclusions are couched in uncertainty, or whether it is because drugs researchers have assumed a very limited role for economists in their analysis
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