Individual behaviours and substance use: the role of price.

I discuss economic approaches to the demand for harmfully addictive substances with an emphasis on the role of money prices. First, I examine trends in the real prices and in the prevalence of the use of cigarettes, alcohol, cocaine, heroin, and marijuana in the U.S.A. Then I present estimates of time-series demand functions. Next, I discuss how economists have modified their traditional model of consumer behaviour to incorporate the addictive aspects of illegal substances. I conclude with implications for tax policy and for the lively and contentious debate concerning the legalization of marijuana, cocaine, and heroin.