Showing papers by "Gary S. Becker published in 2004"

The Economic Theory of Illegal Goods: The Case of Drugs

Abstract: This paper concentrates on both the positive and normative effects of punishments that enforce laws to make production and consumption of particular goods illegal, with illegal drugs as the main example Optimal public expenditures on apprehension and conviction of illegal suppliers obviously depend on the extent of the difference between the social and private value of consumption of illegal goods, but they also depend crucially on the elasticity of demand for these goods In particular, when demand is inelastic, it does not pay to enforce any prohibition unless the social value is negative and not merely less than the private value We also compare outputs and prices when a good is legal and taxed with outputs and prices when the good is illegal We show that a monetary tax on a legal good could cause a greater reduction in output and increase in price than would optimal enforcement, even recognizing that producers may want to go underground to try to avoid a monetary tax This means that fighting a war on drugs by legalizing drug use and taxing consumption may be more effective than continuing to prohibit the legal use of drugs

The Economic Theory of Illegal Goods: The Case of Drugs

Abstract: This paper concentrates on both the positive and normative effects of punishments that enforce laws to make production and consumption of particular goods illegal, with illegal drugs as the main example. Optimal public expenditures on apprehension and conviction of illegal suppliers obviously depend on the extent of the difference between the social and private value of consumption of illegal goods, but they also depend crucially on the elasticity of demand for these goods. In particular, when demand is inelastic, it does not pay to enforce any prohibition unless the social value is negative and not merely less than the private value. We also compare outputs and prices when a good is legal and taxed with outputs and prices when the good is illegal. We show that a monetary tax on a legal good could cause a greater reduction in output and increase in price than would optimal enforcement, even recognizing that producers may want to go underground to try to avoid a monetary tax. This means that fighting a war on drugs by legalizing drug use and taxing consumption may be more effective than continuing to prohibit the legal use of drugs.

Economic approaches to understanding families

Abstract: The economic approach helps explain the enormous changes in fertility, marriage, divorce, and human capital of families during the past 50 years. Large challenges remain to explain below-replacement fertility in over 60 countries and the consequences of such low birth rates for economic growth and other issues.