Illicit Drugs and Economics: Examples for the Principles Classroom

Principles of economics texts are generally packed with interesting examples of economics in action. Unfortunately, the multitude of examples can overwhelm students. Here, we take the “less is more” approach to teaching microeconomic principles. A principles course that teaches economic phenomena by using focused examples may do a better job of solidifying key topics. In this paper, we show that many core economic principles are easily taught using examples from illicit drug markets. These core topics include consumer rationality, scarcity, supply and demand, elasticity, the difference between competition and monopoly, and externalities.