Addiction is a bad habit which leads to considerable negative side effects that are social, psychological and physical nature which causes the user to be dependent on the drugs rather than depending on themselves and their mental faculties. It involves the users having cravings and compulsive behaviours which indicates that they do not just want or need the commodity but crave it and the deprivation of this commodity causes a significant amount of withdrawal symptoms which affects the user physically, psychologically and socially.
The rational addiction theory developed by Becker and Murphy states that the addict is in fact a rational economic man who is able to make choices that maximize his utility and self interest. However once a person becomes addicted he or she is no longer thinking on his natural sense but his reason has been influenced by the drugs which makes him irrational.
The consumer theory in economics states that a consumer would make decisions based on what would give them the most utility or satisfaction. Like all economic theory this is based on the fact that of course this individual is rational however due to the cravings and compulsions experienced from the drugs the individual is not rationally evaluating his cost- benefits analysis but is only thinking of the satisfaction he would get at the moment even though the long term repercussion is much more disadvantageous.
The legalisation of drugs has been an issue all over the world with America having a higher no tolerance for drugs than Europe. Some economists believe that if drugs are legalised and the excise taxes on them increases then the demand for drugs would decrease as less people would be able to afford the drugs.
Drugs are harmful to individuals because of their addictive nature. It puts the users in a vulnerable situation and this leaves them in a state where the government has to care for them. This does not only cost the government about £18 billion a year (police cost, rehab etc) but also reduces the quantity and quality of human labour available to the economy and this reduces the production possibility frontier.
Also legalising drugs would make it appear that it is moral ok and potential users would not hesitate to use. The Gary Becker model in the economics of crimes states that what deters people from committing a crime is the punishment or cost associated with the crime if drugs are legalised there would be an increase in the use.
The legislation of drugs would serve little to the economy other than to increase the problems of violence, disorder, death and addiction. One of the main arguments for legislation of drugs is that it would increase the revenue the government gets as a result of the increase tax however as a result of the increase in the social costs that would arise as a result of the legislating of the drugs there would really be no profits.
Legislation of drugs would lead to an increase in crime (Amsterdam is one of the most violent cities in the whole of Europe and the official there blame it on the legislating of the marijuana drugs). An increase in health related problems like cancer, tumours, heart disease etc , a decrease in the number of students that go to school and also the moral stigma.
Drugs should not be legalised as there costs far outweigh the benefits. The fact that the government increased the taxes on alcohol did not significantly reduce the consumption. Drugs put the users in a state where they are a nuisance to the society and not economically efficient or useful.