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Economics of Addiction

For a number of different and complicated reasons, drug abuse has steadily moved into the mainstream of American life. Risky consumption of alcohol and dangerous substances is not just the business of celebrities, the homeless, and the disenfranchised, as it was long believed to be; now, legal and illegal drugs are widely distributed to people across different demographics, income brackets, and backgrounds. Understanding the economics of addiction sheds new light on how what was once the purview of the black market has now become a public health pandemic.

Economics and Addiction

Economics, explains the American Economic Association (AEA), is the study of many things: of how people use resources, for example, or the study of how (and why) people decide to use their resources in the way they do, to get the things they want. Generally, economics involves studying wealth, finance, and banking, so much so that people often believe that economics is nothing more than dealing with money and stocks. In reality, says AEA, the field of economics helps researchers see patterns and trends in history, and make predictions for the future based on the headlines of today.

Addiction, says Slate magazine, is a tricky concept for an economist to study; economics is based on cause-and-effect logic, but the essence of substance abuse is “quintessentially irrational.” People who are addicted to drugs or alcohol continue their abuse, even with the knowledge (or past that point of comprehension) that what they are doing is financially and medically dangerous. Instead, like a problem gambler, they expect the reward to outweigh the costs. Whatever happens, the theory goes – health issues, loss of a job or family, going bankrupt – it’s worth it, because of the chemically-induced highs that warp and twist the brain’s pleasure centers.

But such is the power of economics that there exists documented cases of drug users terminating their consumption, as and when their circumstances dictated. Business Insider writes of how 20 percent of US servicemen in the American war were addicted to heroin; but upon their return home, the number of soldiers who continued taking heroin was “shockingly low.” The psychiatric researcher who was appointed by President Richard Nixon to study the widespread abuse of heroin among American soldiers, told NPR that only 5 percent of the returning soldiers relapsed to heroin use in the first year; or, to put it another way, 95 percent of the servicemen who used heroin in Vietnam did not resume heroin use upon returning home.

The writer in Slate magazine points out that the decision to start using heroin (to cope with the stress and horrors of the Vietnam War) and the decision to stop using heroin (or, at least, to try to stop) were “rational responses to circumstances,” which is at the heart of economic science.

Behavioral Economics

Psychology Today picks up the point when it talks about “behavioral economics,” which is where the realities of human behavior are looked at through the lens of the traditional interpretation of economics.

When deciding the best possible outcome, most people will weigh the costs against the benefits, and this is the crux on which economic theory is based. People tend to know what they like and what they don’t like, and will never go back and forth between two opposite wants (usually sticking to their preference every time). Rational people can control their urges, and they can say no to impulses that provide a short-term benefit but will eventually hamper long-term goals.

These assumptions make up the principles of economic theory, which economists, statisticians, and scientists use to predict human behavior in the real world on a mass scale. Even the nature of democratic governments is based on this: Give people as many choices as possible, and they will choose which one they like the best.

The behavioral economics mentioned by Psychology Today, on the other hand, takes the stance that human beings do not act in such logical ways. For a lot of people, the clinical self-control to deny their base desires and wants at every turn is not worth the hassle. Everyone is influenced by context, and when faced with the unknown that can come tomorrow or a year from now, many people will settle for the tangibility of the short-term benefit instead of the vague long-term reward (that may or may not materialize). A recovering alcoholic feeling the temptation to relapse is such an example; another might be a person deciding whether or not to take a drug for the first time, balancing the knowledge of the dangers of drugs against the peer pressure to do something ostensibly fun and exciting.

The Psychological Economics of At-Risk Populations

The behavioral economics school of thought tries to understand what makes people tick on this level, in the same way that a cognitive behavioral therapist will try to understand what makes a client think and act in harmful ways; that understanding will shape a treatment plan. Similarly, behavioral economics can prove helpful in devising expectations and treatments for how and why people with mental health disorders that impair impulse control (for example, those caused by substance abuse, bipolar disorder, or ADHD) will gravitate toward outcomes that offer immediate gratification.

One demographic that a behavioral

economist might look at is that of teenagers and young adults. Science magazine writes of a presentation made at a meeting of the Society of Neuroscience, where a group of research posited that teenagers have brains that have to work overtime to control behavior, which can lead to more impulsive reactions to challenging situations compared to children or adults.

To that end, a study published in the Journal of Studies on Alcohol and Drugs looked at the relationship between three indicators of socioeconomic status (income, family wealth, and parental education) and substance use (smoking, alcohol

consumption, and marijuana consumption) among young adults. The study surveyed over 1,200 people between the ages of 18 and 23, and found that those who were children from families of lower socioeconomic status smoked, a connection that researchers attributed to demographics and social roles. Study participants who came from families with a higher socioeconomic status were associated with alcohol and marijuana use in their young adulthood beyond a threshold for which demographics and social roles could account.

The researchers conducting the study concluded that young adults with better socioeconomic backgrounds “were most prone to alcohol and marijuana use.”

How Heroin Crossed Borders

Tech Times warns that “middle class, suburban white adults in their early 20s” are at risk for a drug that is infinitely more dangerous than alcohol and marijuana. The JAMA Psychiatry journal referred to this as “the changing face of heroin use in the United States,” because of how prescription painkillers – many of them derived from the same opium-based chemical compounds as heroin – have become so easily obtainable and so widely demanded.

Throughout the 1990s, pharmaceutical companies threw exorbitant sums of money at doctors and marketers to make drugs like oxycodone (sold under the brand name OxyContin) and hydrocodone (brand name Vicodin) the go-to medications for anything from chronic cancer pain to sports injuries. The companies were aware that the drugs wore off sooner than advertised and instructed sales representatives to impress on doctors to simply prescribe stronger doses.

In this way, an entire generation of Americans was introduced to powerfully addictive drugs that were chemically similar to heroin. Historically, heroin had always been seen as the poison of inner cities and poor urban areas, with a researcher telling Newsweek that in the 1940s, it was popular to think of heroin as a “dirty, low-class kind of drug.”

In the 1940s, however, there were no pharmaceutical corporations aggressively (and insidiously) pushing prescription medications on people desperately craving pain relief, who were willing and able to pay good money to get it. Today, buying a bag of heroin is no longer something that a homeless, poor person does under a bridge. In an example mentioned by The Economist, it is something that Cynthia Scudo, a young grandmother from the suburbs of Denver, did when she repeatedly took too much oxycodone for a hip injury.

The New Heroin User

More than half of the heroin addicts in America are women, says The Economist, and 90 percent of them are white. A study out of Washington University in St. Louis also notes that “most first-timers are in their mid-20s.” This marks almost a complete change from the demographics of heroin users from even just a generation ago.

Most of heroin’s new customers don’t start off looking for heroin. Unlike the old stereotype of heroin users, the members of this socioeconomic class are well-educated, and have good social and mental health structures in place that would preclude them from actively seeking a dangerous drug. But at high doses, even the most beneficial of prescription medication becomes an expensive habit on its own. Cynthia Scudo had to resort to selling her OxyContin pills to buy heroin, which gave her an even more powerful blast of painkilling euphoria. “As if from nowhere,” says The Economist, the mother of eight and grandmother of eighteen, who worked full time and was in good shape became addicted to heroin.

“Heroin crosses all borders,” she told CNN, “all socioeconomic groups.”

Changing Economics

Thanks in large part to pharmaceutical companies bombarding consumers with prescription medication, the economics of addiction have seismically shifted, and how the country has treated those drugs (and the people who use them) has changed as well. When heroin use was primarily the domain of impoverished men of color, says The New York Times, politicians and public polls called for long prison sentences (often heavily skewed based on race) and firmly believed that addiction was a matter of moral failing.

But as heroin use and prescription painkiller abuse infected picturesque suburbs and countryside towns – where the population is mostly white – the harsh tones of the 1970s and 1980s are a distant memory. Now that drug abuse has demonstrably spread across different economic categories, there is an almost reflexive impulsive to call addiction a disease, to promote treatment instead of jail time, and to do away with terms like junkie in favor of patient.

In this new era, white families, writes the Times, who are often wealthier, more educated, and better connected, are seeking “a gentler War on Drugs.” It is a luxury that the former generation of heroin addicts did not have.

Deeply Embedded

Of course, not all white Americans are wealthy, and those who live in small towns scattered across the country are not immune to the siren song of opioids and other drugs. In places where the primary line of work is manual labor – farming, mining, timberwork, or construction – workplace injuries are commonplace, especially in declining industries, where employees are asked to work longer hours and take on more tasks before their jobs are outsourced.

In places like these, writes The Guardian, people are usually poor and poorly educated. When their doctor gives them a bottle of prescription painkillers, they may think nothing of taking more pills than they were told to. They find they like their painkillers so much that they start forging prescriptions and faking injuries to get more drugs, which they

then sell (either to people they know or online) to keep their own habit going. The pills eventually run out, but there is always a supply of heroin to replace the medication.

In small towns like Kutztown, Pennsylvania, which had a population of just over 5,000 in 2010, “heroin is everywhere,” according to a local paramedic speaking to NPRAddiction to opioids, whether legal or illegal, “is deeply embedded” because of how smugglers transport their products from bigger cities, where a saturation of heroin has made organized crime rings target lower-income regions (with less law enforcement and public scrutiny) for their operations. As a result, says NPR, every single demographic has been targeted.

Racial Socioeconomics of Addiction

According to The Atlantic, it is because of how heroin dramatically redrew the borders (and income brackets) of addiction that the medical community and politicians have joined together to declare the epidemic a public health crisis. In fairness, more is known about the science of drugs and the psychology of human behavior (and behavioral economics) to understand that treating drug abusers like criminals does not solve any problems. Furthermore, the diminishing returns of the War on Drugs has forced legislators to think of new, progressive ways to treat an ever-evolving problem.

But when it comes to discussing the socioeconomics of addiction, the topic of race is the elephant in the room. The Atlantic wonders if the legal system is casting a kinder eye towards this modern generation of heroin users – most of them white Americans – while still banging the gavel down on drug users who are of an ethnic minority and, thus, more likely to be economically disadvantaged. Is it possible, asks the Atlantic, to compare the crack cocaine epidemic of the 1980s and 1990s – inextricably linked to poor, inner city black Americans – with the mushroom cloud of heroin and opioid abuse of the early 21st century without looking at race?

The Crack Cocaine Epidemic

Issues of race continue to dominate the conversation of who uses drugs in America more, and what happens to those people. White Americans are more likely to use illegal drugs, points out The Huffington Post, but black Americans are three times more likely to spend time in jail for their drug crimes. The statistic comes from Human Rights Watch, which explains that police are often directed to concentrate their drug busts in low-income communities, which are, more often than not, inhabited by people of color.

Another statistic comes from TIME magazine, which quotes a study from Duke University that found that black youths are 10 times more likely to be arrested for drug crimes than white youths, even as young black Americans “are actually less likely to use drugs, and less likely to develop substance abuse disorders” than white, Native American, Hispanic, and interracial people.

The disparity can trace its origins to the days of the so-called “crack cocaine epidemic” of the 1980s, when underground manufacturers found themselves unable to keep up with the surging, mainstream demand for cocaine. Dealers resorted to using basic household items and anything they could get their hands on to cut new batches of cocaine. As the product became chemically impure, its price plunged (partly due to the abundance with which it could be produced), making the new menace affordable to low-income, inner city people – most of whom were African-American.

As a response to the boom (which, by 1986, most Americans considered the biggest problem in the country), laws were written that targeted the communities where the crack was being sold and consumed but largely left the manufacturing operations untouched. The result, writes the Los Angeles Times, is that for decades, black Americans accounted for over 80 percent of federal convictions related to possessing crack cocaine. In truth, however, the laws “tended to punish blacks more severely than whites,” by enforcing longer prison sentences for violations stemming from crack cocaine than violations stemming from powdered cocaine, which was mostly used by white Americans.

Poverty and Addiction

Scientifically, however, there is no significant difference between the two forms of cocaine, the effects they have on users, and the related crimes that are associated with their consumption. However, since impoverished African Americans were connected with the initial explosion of crack cocaine, the taint has persisted. The assistant chief of the Los Angeles Police Department has blamed the legacy of crack cocaine for “changing the architecture” of low-income communities in his city.

To that point, Reason magazine notes that a majority of the people arrested in 2012 for drug-related offenses were African Americans from low socioeconomic backgrounds; they did not finish high school, and most of them did not have a college degree. Among the adults, most had no health insurance or a home of their own, and 41.8 percent were unemployed.

Reason adopts a libertarian perspective when talking about the intersection between economics and addiction. The magazine argues that it is poverty that has drawn such deep divisions in American society, condemning some drug users to a lifetime of shame and legal persecution, and bestowing sympathy and treatment on others. Even beyond race, Reason argues that women of color are often given much harder sentences for drug-related crimes than men, largely due to such women having even lower income and education rates than their male counterparts. A separate finding by The New York Times reports that women who don’t attend college are 30 percent more likely to be victims of sexual assault than women who do attend college (and may thus be from a higher socioeconomic background).

Low-Income Women and the Economics of Addiction

Women, in general, tend to have more risk factors that may influence the development of a substance abuse problem; indeed, the National Online Resource Center on Violence Against Women writes that women who suffered abuse in their childhood and teenaged years are at greater risk for arrest and incarceration, due to “entrapment into crime by abusers and by gender, race and class oppression.” Young women running away from abusive home environments, for example, are often forced to live on the streets and turn to prostitution for survival; and to that point, the Journal of Psychoactive Drugs finds “a high prevalence of alcohol and drug abuse” among street prostitutes, many of whom escaped families where drug abuse was present. Instead of assuming that substance abuse causes prostitution, the researchers writing in the journal theorized that “both prostitution and substance abuse are the behavioral translations of these women’s endless cycles of victimization,” in addition to an expression of depression, helplessness, poor self-image, and psychological paralysis.

Another article in Reason puts it another way: the correlation between being poor and getting caught for doing drugs is much stronger than the correlation between doing drugs and committing drug-related crimes.

It is a sad reality that substance abuse is prevalent in families that are below the poverty line. Approximately 20 percent of people receiving welfare admitted to using some kind of drug in the year prior to the Substance Abuse Policy Research Program asking them if they had. The Fix writes of how a person who makes less than $20,000 a year has a 66 percent chance of relapsing into a cocaine habit than someone who makes $70,000 a year; a person in the latter income bracket can afford to take time off work, receive long-term and private rehabilitation, and can pay for children and dependents to be looked after while receiving treatment.

Homelessness and Addiction

A yearly income of $20,000 is on the low end of the spectrum for a lot of people, but there are those who can only dream of making that much money. The American Public Health Association writes of how people who are homeless are subject to a number of mental and medical health concerns, chief among which are issues of substance abuse. A 2016 article published in the journal of Drug and Alcohol Dependence looks at some of the very complex socioeconomic circumstances that can contribute to homelessness:

  • Poverty
  • Discriminatory housing policies
  • Prison sentences
  • Mental health problems
  • Drug use

The US Department of Housing and Urban Development found that 20 percent of the country’s homeless population could be diagnosed with a severe mental health illness, including schizophrenia, major depression, or depression, all of which could contribute to, exacerbate, or be exacerbated by both a homeless status and a substance abuse problem.

In the same way that addiction itself crosses multiple socioeconomic categories, the cross section between homelessness and addiction also spans a variety of economic demographics. As far back as 1989, The New York Times wrote about a homeless shelter in the South Bronx neighborhood, where “the vast majority” of residents had been employed until very recently before becoming homeless. A Columbia University anthropologist told the Times that 70 percent had been employed within the previous year, and nearly three-quarters of them were addicted to drugs or alcohol.

Similarly, a survey of homeless people in 24 cities found that between 25 and 30 percent of them had active jobs but were still without a place of their own to live.

The Reality of Addiction

Drugs, writes the Times, are expensive, and people hooked on drugs – whether through a family history of addiction, a mental health problem, a stressful job, a failing marriage, or an addiction that starts from prescription painkillers – will sometimes work for no other reason than to fund their habit. Eventually, as they usually do, the drugs catch up. The director of homeless rehabilitation program in Washington, DC, told The New York Times that an addict can spend up to $200 a day on crack cocaine or $150 a day for heroin. They are inevitably fired from their job, evicted, or both, and resort to living on the street as they sell drugs, steal, or beg, usually to scrape together whatever they can to buy more drugs.

The National Alliance to End Homelessness writes that in January 2015, there were 564,708 homeless people on any single night across America. The causes of homelessness are complicated and myriad; by a similar measure, so are the causes of drug addiction. The misguided policies of the War on Drugs opened the doors of a black market that has called people across racial lines, tax brackets, and urban, rural, and suburban regions. It has compelled policymakers – some of them who ran for president, like Chris Christie of New Jersey – to publicly address the reality that, regardless of background or upbringing, drug addiction can happen to anyone.