JOURNAL OF THE EXPERIMENTAL ANALYSIS OF BEHAVIOR 1991, 56, 377-393 NUMBER 2 (SEPrEMBER)

BEHAVIORAL ECONOMICS OF DRUG SELF-ADMINISTRATION AND

DRUG ABUSE POLICY
STEVEN R. HURSH
WALTER REED ARMY INSTITUTE OF RESEARCH
The concepts of behavioral economics have proven useful for understanding the environmental control
of overall levels of responding for a variety of commodities, including reinforcement by drug self-
administration. These general concepts are summarized for application to the analysis of drug-rein-
forced behavior and proposed as the basis for future applications. This behavioral agenda includes
the assessment of abuse liability, the assay of drug-reinforcer interactions, the design of drug abuse
interventions, and the formulation of drug abuse public policy. These separate domains of investigation
are described as part of an overall strategy for designing model projects to control drug use and testing
public policy initiatives.
Key words: behavioral economics, demand curve, elasticity, drug self-administration, cost, unit price,
FR schedule, public policy, design of culture

Concepts of behavioral economics have
proven useful for understanding the environ-
mental control of overall levels of responding
for a variety of commodities in closed systems
(Foltin, in press; Hursh, 1984; Lea, 1978; Lea
& Roper, 1977; Rashotte & Henderson, 1988).
Recently, several publications have demon-
strated the applicability of these same prin-
ciples for describing the strength of perfor-
mances maintained by drug reinforcement
(Bickel, DeGrandpre, Higgins, & Hughes,
1990; Bickel, DeGrandpre, Hughes, & Hig-
gins, 1991). This paper summarizes the basic
principles of behavioral economics as applied
to drug-reinforced behavior and proposes the
following agenda for future applications: (a)
assessment of abuse liability, (b) assay of drug-
reinforcer interactions, (c) framework for de-
signing drug abuse interventions, and (d) strat-
egy for formulating drug abuse public policy.
ASSESSMENT OF ABUSE LIABILITY
A large variety of drugs have been shown
to serve as reinforcers for operant behavior
The views of the authors do not purport to reflect the
position of the Department of the Army or the Department
of Defense (para 4-3, AR 360-5). The research described
in this report was conducted in compliance with the An-
imal Welfare Act and other Federal statutes and regula-
tions relating to animals and experiments involving ani-
mals and adheres to the principles stated in the Guide for
the Care and Use of Laboratory Animals, NIH publication
86-23, 1985 edition. The author wishes to acknowledge
the assistance of Raymond Genovese, Frederick Manning,
Harold Black, and Gregory Galbicka during preparation
of earlier drafts of the manuscript. Reprints may be ob-
tained by writing Steven R. Hursh, Division of Neuro-
psychiatry, Walter Reed Army Institute of Research,
Washington, D.C. 20307-5100.
(Brady & Lukas, 1984; Johanson, 1978). In
general, drugs that maintain recreational use
in humans will serve as reinforcers for behav-
ior in nonhumans, the one general exception
being hallucinogens, which follow an atypical
pattern of use in humans as well (Griffiths,
Bigelow, & Henningfield, 1980). In a typical
experiment with heroin as the reinforcer (Els-
more, personal communication), monkeys were
prepared with indwelling catheters for the de-
livery of small-volume infusions of heroin or
vehicle dependent on the occurrence of key-
press responses. A similar key could provide
750 mg food pellets. Without special shaping
procedures, responding for heroin gradually
increased to stable levels above that observed
when responses produced vehicle (saline so-
lution). Over subsequent conditions, the num-
ber of responses required to obtain an injection
(fixed-ratio schedule, FR) was increased from
1 to 240. Figure 1 (bottom panel) shows the
number of injections obtained per day as a
function of the size of the FR. This plot of
daily drug consumption as a function of the
FR (price) is termed a demand curve. When
plotted in log-log coordinates, the slope of the
function indicates the sensitivity of consump-
tion to changes in price. If the proportional
change in consumption is less than the pro-
portional change in price, then the slope is
between 0 and -1 and is termed inelastic; if
changes in consumption are proportionately
greater than changes in price, then the slope
is more negative than -1 and is termed elastic.
For the demand curves in Figure 1, the slope
was less negative than -1, and the correspond-
ing response rates that produced these levels

377
 378 STEVEN R. HURSH

; 300
Wa
a
0
0
A Stu
A i
%.100I
HEOI EL WOOD £
100 IO/

300

z
100
z
z

0 Percy

10
110 100 1000
1 3 10 30 100 300 FIXED RATIO (LEVER PRESSES/REINFORCEMENT)
FIXED RATIO (LEVER PRESSES/REINFORCEMENT)
Fig. 2. For 4 rhesus monkeys, daily lever presses for
Fig. 1. Top panel: For 2 rhesus monkeys, daily con- food or heroin, as indicated, as a function of FR schedule.
sumption of food pellets as a function of FR schedule, in
log-log coordinates. Bottom panel: For 4 rhesus monkeys,
dinates, then elasticity may be read as the point
daily infusions of heroin as a function of FR schedule, in
log-log coordinates. slope of the demand curve. A variety of envi-
ronmental and procedural factors contribute
to the level and elasticity of demand. The level
of consumption show an increase with increas- of demand is controlled in part by the size of
ing FR (price) (Figure 2). For comparison, 2 each "package" of the commodity (the scale of
other monkeys were tested under a similar se- measurement of consumption), by character-
ries of FR schedules with food reinforcement, istics of the consumer (such as body weight for
and the results were similarly plotted in Fig- food reinforcers), and by the current state of
ures 1 (top panel) and 2 (dashed lines). For deprivation. The elasticity of demand is largely
food reinforcement, demand sloped downward determined by the nature of the commodity
at a less negative slope than demand for heroin ("necessity" or "luxury" good) and the avail-
(i.e., demand for food was more inelastic) and
responding (Figure 2) increased at a greater
rate with increases in FR value. Thus, demand
(across this range of FR values) was inelastic LEVEL SHIFT
for both commodities, but was more inelastic
for food.
- -l

Demand curves for a variety of commodities,

including drug reinforcers, have been evalu- ENI
ated in the laboratory (see Bickel et al., 1990,
1991; Hursh, 1980, 1984). Demand curves
may be distinguished by two general charac- a
teristics, illustrated in Figure 3. A demand
curve depicts the total consumption of a com- ELASTICITY,SHIFT \

modity as a function of price (the cost per unit

of reinforcement, see unit price below). The
level of demand is the total amount of con-
sumption at minimal price, usually FR 1; the Log Price
elasticity of demand is the rate of change in
consumption with increasing price (see Hursh, ingFig. 3. Diagram of a hypothetical demand curve show-
daily consumption as a function of price, in log-log
1980, 1984, for further explanation). If the coordinates. Also shown are two prototypical changes in
demand curve is plotted in logarithmic coor- demand, a level shift and an elasticity shift.
 BEHA VIORAL ECONOMICS OF DRUG ABUSE
DEMAND
a-
U-
(I)
a.
CO
z
a:
LL
tIN
100
FIXED RATIO
Fig. 4. Left panel: Daily consumption of food or saccharin as a function of FR schedule, in log-log coordinates.
Right panel: Total daily lever presses for either food or saccharin as a function of FR schedule, in log-log coordinates.
Data from a representative rhesus monkey.
ability of substitutes or other sources of the
commodity. Figure 4 (left panel) illustrates
demand by a monkey for food and saccharin-
sweetened water; level of demand at a low
price was adjusted to be similar by varying the
size of the saccharin reinforcer. As price in-
creased, consumption of saccharin decreased
much more rapidly than consumption of food,
indicating that elasticity of demand for sac-
charin, a nonnutritive commodity, was greater
than elasticity of demand for food, a biological
necessity. The right panel of Figure 4 shows
the total output of responses (key presses) re-
quired to produce these reinforcers across the
range of prices. These inverted U-shaped func-
tions are typical for most commodities studied
in a closed economy (Hursh, 1980, 1984; Hursh
& Bauman, 1987). The level of responding for
food was about 10 times that for saccharin at
its peak and reached its peak at a much higher
price.
Unit price. When assessing demand for a
commodity across different test situations, it is
important to insure that the same units of price
and consumption are used for the analysis.
Price is best understood as a cost-benefit ratio
that describes the amount and effort of work
required for each unit of reinforcement. This
ratio is defined as unit price:
Unit price
Responses per reinforcer x Effort
Size of reinforcer
379
RESPONSE OUTPUT
< 10,000 -
a
cc
L >
ui
00o 1000
cL
cc 1000
1 00 1
1000 10 100 1000
FIXED RATIO
Hursh, Raslear, Shurtleff, Bauman, and Sim-
mons (1988) demonstrated that this measure
was capable of providing a unitary demand
curve from eight different test conditions all
scaled in unit-price terms. When using drugs
as reinforcers, unit price may be defined as
follows (see Bickel et al., 1990):
Unit price
Responses per drug reinforcer x Effort
Drug dose
Likewise, consumption across conditions
should be measured in comparable units across
conditions, usually total drug consumption per
day (frequency of infusion x dose or total vol-
ume x concentration).
The application of this methodology with
drug reinforcers is illustrated in a study by
Lemaire and Meisch (1985). The reinforcer
was a liquid mixture of pentobarbital and eth-
anol. Reinforcer size was studied by varying
the number of liquid deliveries per period of
reinforcement (e.g., 2, 8, or 16 deliveries).
Combined with these sizes were different FR
schedules that ranged from FR 2 to FR 256.
Figure 5 shows the average demand for this
drug mixture plotted as a function of unit price.
For example, consumption at a unit price of
16 was observed under three combinations of
FR and reinforcer size: FR 32 for 2 deliveries,
FR 128 for 8 deliveries, and FR 256 for 16
deliveries. Regardless of the combination, de-
380 STEVEN R. HURSH
mand was similar when plotted in common
units of price. The daily output of responses
that generated this demand is shown in Figure
5. Response output increased up to a unit price
of 32 and decreased at higher prices; that is,
demand was initially inelastic and became
elastic at unit prices above 32. FR 32 is defined
as Pm.. the price that produced maximum out-
put and demarcates the boundary from inelas-
tic to elastic demand. This general pattern of
initial inelasticity followed by elasticity at
higher prices is a characteristic of most rein-
forcers. Bickel et al. (1990) analyzed a variety
of drug self-administration studies in terms of
unit-price demand curves and found this same
pattern for a variety of drug reinforcers.
Demand curve analysis. The smooth curve
drawn through the points in Figure 5 is from
an equation for demand that was fit to the data
set (see Hursh et al., 1988; Hursh, Raslear,
Bauman, & Black, 1989). This equation has
three parameters: L for initial level of demand
at minimal price, b for initial slope of the de-
mand curve at minimal price, and a for the
acceleration or increase in slope of the demand
curve with increases in price. The equation is
as follows, stated in the usual logarithmic units
of price (P) and consumption (Q):1,2
ln(Q) = ln(L) + b(ln P) - a(P). (1)
Elasticity of demand is the point slope (first
derivative) of this function and is a linear func-
tion of price:
Elasticity = b - a (P).
Price yielding maximal output, Pma,s is:
P.. = (1 + b)/a.
In most cases, the b parameter is negative
and close to zero so that elasticity differences
are manifest in changes in a. Level shifts are
I Equation 1 is derived from an exponential expression
so that natural logs are required for accurate parameter
estimates. The equation may be fit to demand curve data
on any IBM-compatible computer using GraphPADs In-
plot (GraphPAD Software, 10855 Sorrento Valley Road,
#9, San Diego, California 92121). The program fits
Equation 1 to the data, estimates the three parameters (+
standard errors) and the value of r2, and graphs the results
(see Figure 5). Consult the author for details.
2 In an earlier
paper, Hursh and Bauman (1987) pro-
posed a different demand equation derived from economic
utility theory. Subsequent work has shown this equation
to be less accurate in fitting actual data; also, it did not
yield simple expressions for elasticity and P,,,,..
seen as changes in the L parameter. For the
data in Figure 5, the equation accounted for
about 99% of the variance; in general, the
equation accounts for 90% to 93% of the vari-
ance in consumption in studies conducted to
date (Foltin, in press; Hursh et al., 1988, 1989;
DeGrandpre & Bickel, personal communica-
tion).
This method of analysis may have appli-
cations for assessing the abuse liability (like-
lihood of human acquisition and maintenance
of drug taking) of new drugs prior to use in
humans. Drug self-administration studies with
nonhuman primates are commonly used to es-
tablish the reinforcing properties of drugs and
to provide a qualitative assessment of the
strength of performance maintained by them
(Brady & Lukas, 1984; Johanson, 1978). De-
mand curve analysis based on an application
of Equation 1 under standardized testing con-
ditions could provide a quantitative assessment
of abuse liability. The parameters of the de-
mand equation provide an estimate of the ex-
pected level of consumption (L) and the sen-
sitivity of consumption to increases in price
(a). If other aspects of the experiment are held
constant (e.g., effort of the response, unit of
consumption, and the length of daily test ses-
sions), then abuse liability of different drugs
could be compared based on the values of the
parameters of the demand equation.
Demand curve analysis is not time consum-
ing. Once stable self-administration is estab-
lished at a low FR (e.g., FR 2), a demand
curve can be estimated by increasing the FR
in 20% to 40% steps each test day up to a
maximum FR that reduces consumption to
about 10% of baseline, a procedure that takes
about 20 to 30 days. The demand curves in
Figures 4, 13, and 14 were obtained using this
method. Several repetitions of this procedure
may be used to establish the stability of the
parameter estimates in time. Other studies have
used test sequences with even larger step sizes
each day that allow exploration of the range
of consumption in as few as 7 test days (see
Figure 8; see also Hursh et al., 1988; Raslear,
Bauman, Hursh, Shurtleff, & Simmons, 1988).
Given the speed of the assessment, it is feasible,
in the same test subjects, to examine the mod-
ification of demand by competing reinforcers
or substitution of other drugs and to quantify
the effects in terms of changes in the param-
eters of Equation 1.
 BEHA VIORAL ECONOMICS OF DRUG ABUSE
Demand for Pentobarbital/
Ethanol Mixture
1000
c
LU
0
cz
x
z0
cLI
100
0 w
0 2 Deliveris
0 o 8 Deliveries
I- A 16 Deiverie
I 10
UNIT PRICE
Fig. 5. Left panel: For a rhesus monkey, total daily consumption of pentobarbital/ethanol mixture as a function
of unit price (see text for explanation), in log-log coordinates. Right panel: For same conditions in left panel, average
daily responses per day as a function of unit price, in semilog coordinates. In each panel, Pma. is indicated by vertical
grid lines at a unit price of 32. Data from Lemaire and Meisch (1985).
Calibration methods. The definition of unit
price and the mathematics of Equation 1 sug-
gest that any comparison of elasticity estimates
across laboratories will require an estimate of
the effort of each response and calibration of
the units and value of each reinforcer. This
presents a problem for any retrospective anal-
ysis of demand from previous studies with drug
reinforcers; precise comparison of elasticities
will be inaccurate without measurement of re-
sponse effort and comparable units of dose and
potency.
Future studies can correct for these meth-
odological differences. The most direct ap-
proach to calibration of effort would be to adopt
a standard, calibrated operandum for these
studies. Standardization may not be necessary,
however, if appropriate measurements are
taken to permit computation of a correction
factor. A recent study by Bauman (1991) in-
dicated that response-initiated fixed-interval
schedules reduced consumption about as much
as fixed-ratio schedules that were executed in
the same amount of time. By implication, the
results support a proposal that the amount of
time taken to complete an FR is the critical
cost factor that decreases consumption. This
finding, coupled with the observation by Hursh
et al. (1989) that doubling effort had the effect
of doubling the median interresponse time and
the average time to complete a given FR, sug-
gests that the time required per unit reinforce-
ment may conveniently summarize the effects
of both effort and FR. This easily obtained
measure, then, could be used to calibrate cost
across different laboratories for the compari-
Responding for Pentobarbital/
Ethanol Mixture
8,000
0
6,400
CLJ
vn 4,800
z
0
° 3,200
Av
1,600
w
100 1 10 32 I100
UNIT PRICE
son of demand elasticity; however, this pro-
posal requires further systematic investigation.
Likewise, and perhaps more importantly,
the size and value of the reinforcer must be
calibrated across experiments. Because rein-
forcer size and value enter into the calculation
of both unit price and daily consumption, dif-
ferences in measurement can lead to erroneous
differences in the parameter estimates of de-
mand and elasticity. Correction for units of
dose is an easy task; more difficult is calibration
of reinforcer value, because drugs often differ
in pharmacological potency. Hursh et al.
(1989), in a study using food reinforcement,
provided a method for estimating differences
in reinforcer value from the observed levels of
consumption at FR 1. In brief, the ratio of
baseline levels of consumption was used to ad-
just unit price to obtain a value-independent
measure of elasticity. For example, if Rein-
forcer A supported twice the consumption at
FR 1 as Reinforcer B, then A is estimated to
have half the potency of B (QB/Q.). This cor-
rection can be made empirically. In the com-
parison of demand for food and saccharin
shown in Figure 4, the saccharin reinforcer
was adjusted in volume to yield a daily rein-
forcer consumption equal to that of food at FR
1. Having equated the reinforcers for value
(level of consumption at FR 1), demand could
then be fairly compared in terms of reinforcers
per day as a function of responses per rein-
forcer. In the hypothetical example given here,
Reinforcer A could be dispensed in reinforcer
units twice that of Reinforcer B to yield equal
value units of reinforcement at FR 1. Elasticity
382 STEVEN R. HURSH

I
0
-0
,,cT
BE
10
* 0
LUJ
0-

C,,
* FOOD
courtwme ToBITS
O SUCROSE

Fig. 6. Diagram of four hypothetical forms of rein-

1
forcer interactions (see text for explanation). 1 10 100
UNIT PRICE - FOOD
of demand for A and B could then be directly Fig. 8. Mean daily consumption, by 6 rats, of food
and sucrose as a function of the unit price (FR schedule)
compared without concern for reinforcer size for food, in log-log coordinates.
or potency. Additional work with drug rein-
forcers is required to validate these methods.
DRUG-REINFORCER INTERACTIONS to each roughly matches the amount of rein-
Within a behavioral economic framework, forcement received from each (the matching
reinforcer interactions are classified into sev- law; see Davison & McCarthy, 1988). When
eral categories, illustrated in Figure 6. Most the two alternatives require a specific number
studies of choice with nonhumans have ar- of responses per reinforcer delivery, subjects
ranged for the alternative behavior to provide generally show exclusive preference for the least
the same, perfectly substitutable reinforcer, costly of the alternatives (Herrnstein, 1958;
usually food. This yields a specific kind of Herrnstein & Loveland, 1975). This situation
interaction in which the amount of behavior is much like comparison shopping for identical
items from different stores; all else being equal,
one will go to the store with the lowest price.
Most choices are between commodities that
m are not perfect substitutes. The other inter-
actions depicted in Figure 6 are imperfect sub-
stitutes, complements, and independent rein-
25 forcers. Figure 7 illustrates the difference
0
between imperfect substitutes and comple-
ments. Along the x axis is the price of Com-
0
modity A; along the y axis is the quantity of
I
consumption of the alternative Commodity B
z with fixed price. As the price of A increases,
0 consumption of A decreases, the usual demand
a. relation. If, at the same time, the consumption
of B increases in response to these increases in
the price of A, then B is defined as a substitute
zCo
Cj) for A. If the consumption of B decreases, then
0
10
B is defined as a complement of A.
10 100 Choice between two imperfect substitutes is
UNIT PRICE - COMMODITY A illustrated in Figure 8 (Hursh & Bauman,
1986). One alternative was a nutritive food
Fig. 7. Diagram of hypothetical changes in consump- pellet available after pressing a lever; the other
tion of Commodity B as a function of the unit price of
Commodity A. Circles indicate a complementary relation; alternative was pellets of sucrose freely avail-
squares indicate a substitutable relation. able in a cup. The food pellet was a balanced
 BEHA VIORAL ECONOMICS OF DRUG ABUSE 383

10001 A
AA A A
AA AA AA
AAA AA A
COD A AA A
00 0
Cl: 0 0 A
0
0 0
0
et
COO
C03
C=
F-
C013 100-
g
Co
0
0 00
Co
-J
UJ
A WATER FR 10 0

00' IO FOOD

10 100 1000
FIXED RATIO
Fig. 10. Diagram of nonreciprocal interaction be-
Fig. 9. For a representative monkey, daily consump- tween ethanol and phencyclidine (PCP). Features of eth-
tion of food and water as a function of the FR for food, anol may substitute for PCP, but features of PCP may
in log-log coordinates. Water was constantly available not substitute for those of ethanol that are outside its
under an FR 10 schedule. domain of stimulation (shaded area).

diet, but less sweet; the sucrose was sweet and
caloric but lacked many essential nutrients.
The price of the food pellets was increased
across conditions of the experiment; daily con-
sumption of sucrose was measured at each price
of food. Even at the lowest price of food (FR
1), some sucrose was consumed; as the price
of food increased and food consumption de-
creased, consumption of sucrose increased as
a partial substitute. However, even at the high-
est price of food (FR 243), some food was con-
sumed despite the free availability of sucrose.
This reciprocal trade-off between consump-
tion of two reinforcers is typical of imperfect
substitutes.
Choice between two complements is illus-
trated in Figure 9. One alternative provided
pellets of food; the other alternative provided
squirts of water. As the price of food increased,
decreasing food consumption, daily consump-
tion of water decreased. The value of water as
a reinforcer declined as the consumption of
food declined.
Drug reinforcers may, by their neurochem-
ical nature, reflect different forms of interac-
tion that parallel these interactions seen with
consumable reinforcers. An excellent example
of different drug interactions was demon-
strated by Carroll (1987). In this study subjects
were given two drug alternatives, phencycli-
dine (PCP) or ethanol (ETOH). The price of
each commodity was varied by altering the
concentration of drug in each delivery; lower
concentrations represented higher unit prices
of the drug. In the first experiment, the unit
price of PCP was varied, once without ETOH
available and later with ETOH available. As
the unit price of PCP increased, consumption
of PCP declined, and the decline was greater
when ETOH was available as a substitute. At
the same time, ETOH consumption increased
at the highest unit prices of PCP. Thus, ETOH
functioned as a substitute for PCP as the price
of PCP increased. In a second experiment, the
unit price of ETOH was varied, once without
PCP available and later with PCP available.
As the unit price of ETOH increased, con-
sumption of ETOH declined, but the rate of
decline was independent of the availability of
PCP. Furthermore, there was little change in
the consumption of PCP as the consumption
of ETOH was driven down by increasing price.
Thus, although ETOH served as a substitute
for PCP in Experiment 1, in Experiment 2
PCP did not serve as a substitute for ETOH.
This study illustrates a nonreciprocal inter-
action between two commodities.
Figure 10 depicts diagrammatically how
such an asymmetry might come about. Con-
ceive of each drug reinforcer as consisting of
384 STEVEN R. HURSH
a group of stimulus features, perhaps coincid-
ing with areas of central nervous system stim-
ulation. If we think of ethanol as a drug with
a relatively large set of stimulus features (it
has nonspecific action throughout the brain)
and PCP as a drug that stimulates only a sub-
set of those same features (it activates specific
neural receptors), we can see that ETOH stim-
ulation would substitute for PCP stimulation
of the subset, but that PCP stimulation could
not substitute for those stimulus features of
ETOH that were outside the PCP domain of
stimulation. Thus, observations of reciprocal
and nonreciprocal reinforcer interactions may
give some clue to the underlying neural mech-
anism of action of the two alternative drug
reinforcers.
DRUG USE INTERVENTIONS
The concepts of substitution and comple-
mentarity provide some insights into important
limitations of individual therapy programs for
the control or elimination of drug abuse in
individual clients. Within a behavioral frame-
work, one can conceptualize the therapeutic
situation as one in which the therapist or cli-
nician attempts to shape new behavior under
the control of acceptable reinforcers that com-
pete with and reduce the occurrence of behav-
ior to obtain illicit drugs. Thus, the reinforcers
arranged by the therapeutic process interact
with those from the use of illicit drugs (see
Thompson, Koerner, & Grabowski, 1984).
The effectiveness of this competition will de-
pend, at least in part, on several economic fac-
tors: the amount of direct substitution between
the two sources of reinforcement, the avail-
ability of desirable complements to the ther-
apeutic reinforcers that will maximize their
effectiveness, and the amount of direct com-
petition that exists between the two sources of
reinforcement (i.e., does performance for one
preclude or prevent reinforcement from the
other). These factors can be illustrated by con-
sidering the effectiveness of methadone ther-
apy for users of heroin.
Methadone is an imperfect substitute for
heroin; it is usually explicitly formulated so
that an oral dose will prevent opiate with-
drawal but will not produce a pronounced eu-
phoria or "high." It substitutes for heroin to
prevent withdrawal symptoms, the aversive
consequences of nonuse of the drug, but does
not substitute for the immediate positive re-
inforcing consequences of euphoria. One could
predict, then, that even if a large price differ-
ential existed between the two commodities,
some heroin would still be purchased from
illicit sources for its unique reinforcing fea-
tures (see Stitzer, Grabowski, & Henningfield,
1984).
In addition, heroin is often consumed as part
of a social ritual, and these social events serve
as complements to the primary reinforcing
consequences of the drug. To the extent that
the substitute, methadone, must be consumed
in a clinical, nonsocial environment, its value
will be diminished as an adequate substitute
for heroin because it is not accompanied by
important complementary social reinforcers
(see Hunt, Lipton, Goldsmith, & Strug, 1984).
Therapy for opiate addiction usually con-
sists of other reinforcers along with metha-
done, such as ajob and participation in a therapy
group. The effectiveness of these alternative
reinforcers as deterrents to further illicit drug
use will depend, in part, on the existence of
direct competition between the two sources of
reinforcement. A study by Elsmore, Fletcher,
Conrad, and Sodetz (1980) illustrates the im-
portance of competition in reducing drug con-
sumption by a nondrug reinforcer. In this ex-
periment, baboons were intermittently
presented with two keylights that signaled the
availability of a choice between an intravenous
infusion of heroin (0.1 mg/kg heroin HCI) or
delivery of 3 g of food (four 750-mg Noyes
pellets). Trials were separated by an interval
that was varied across conditions from 2 min
to 12 min. Subjects lived in there test cages
and received all their food under the test con-
ditions. The results are shown in Figure 11.
When trials were plentiful (every 2 min), fre-
quent choices of both food and heroin occurred;
the mere presence of the alternative food re-
inforcer did not eliminate heroin consumption.
However, as the frequency of trials decreased
with longer intervals between choices, heroin
choices were placed in competition with main-
tenance of food consumption. Under these con-
ditions of reduced "income" of trials, the sub-
jects allocated proportionately more of the
available trials to food and less to heroin, as
one might expect from the differences in elas-
ticity shown in Figure 1. Under the conditions
with most infrequent trials (every 12 min), this
 BEHA VIORAL ECONOMICS OF DRUG ABUSE
100
- -
--.&- -------- --_-
k-0~~~~~~
- -
50 11-
4
a
s
IL
LA
0
zU
Food Heroin
20- Baboon P241 a A
Baboon P363 0 0
10
4 2 4 8
INTERTRIAL INTERVAL (Min.)
Fig. 11. For 2 baboons, choices per day for food and heroin as a function of the intertrial interval. Best fitting
straight lines are drawn through the points. Data are from Elsmore et al. (1980).
competition reduced consumption of heroin an
average of 83% compared to conditions with
frequent trials. This finding of an income effect
on choice behavior has been confirmed in sev-
eral other studies with primates, mice, rats,
and pigeons (Hastjarjo, Silberberg, & Hursh,
1990; Sakagami, Hursh, Christensen, & Sil-
berberg, 1989; Shurtleff & Silberberg, 1990;
Silberberg, Warren-Boulton, & Asano, 1987).
These laboratory results with nonhuman
subjects suggest that procedures that require
heroin abstinence as a prerequisite for reten-
tion of a job or admittance to the therapy group
might be expected to enhance the direct com-
petition between the drug and nondrug rein-
forcers. Of course, unlike the previously de-
scribed study with food pitted against heroin,
the winner of that competition may not be
therapeutic alternatives, given the other limi-
tations of therapy listed above. However, given
sufficiently attractive therapeutic alternatives,
such competition may be critical to elimination
of further illicit drug use. This may be es-
pecially true for beginning drug users prior to
the development of tolerance and dependence
as a consequence of repeated drug exposure,
and prior to isolation from the community of
-- -
° - -
A
0
~~~~~~Foo 0
A
12
those who do not use drugs and integration
into the social network of drug users (Hub-
bard, Rachal, Craddock, & Cavanaugh, 1984;
see Grilly, 1989, for a review).
DRUG ABUSE POLICY
Specific therapeutic interventions may be
viewed as one part of an overall public policy
concerning illicit drug sale and use. Behavioral
economics may be used as an important inter-
pretive and analytic tool for evaluating alter-
native public policy initiatives. The first re-
quirement of this strategy is the clear
specification of public policy objectives. A par-
tial list of those objectives might include the
following: (a) reduction of illicit drug use, (b)
reduction of crime by drug users, (c) reduction
of distribution and sale of illicit drugs, and (d)
reduction of distribution-related crime.
These objectives may be restated in behav-
ioral economic terms. In order to make this
translation, first consider the total drug mar-
ketplace as represented by the demand and
supply interaction diagrammed in Figure 12.
Demand has been previously defined as the
level of consumption that will occur across a
series of prices; supply describes the behavior
386 STEVEN R. HURSH
MARKET EQUILIBRIUM
DEMAND SUPPLY
MINIMIZE 1-11 MAXIMIZE
PRICE / PRICE
/
Fig. 12. Diagram of hypothetical market equilibrium
between consumer demand and seller supply of a partic-
ular commodity, as a function of market price. Consumer
attempts to minimize price; seller attempts to maximize
price. The equilibrium market price is shown as the in-
tersection of these two hypothetical functions.
of the seller of the drug and indicates that
higher prices increase the likelihood that in-
dividuals will obtain and resell the illicit drug
to the end user. According to microeconomic
theories of price (Watson & Homan, 1977),
these two forces are in competition in the mar-
ketplace, and the equilibrium market price is
determined by the intersection of these two
functions. The level of illicit drug use is simply
the total level of drug consumption at the equi-
librium market price. The level of illicit drug
sale and distribution is that portion of total
drug consumption that is from illicit sources.
Crime related to drug use, for the most part,
can be ascribed to two primary factors-the
need for money to purchase the drugs, on the
one hand, and the loss of self-control that is a
direct result of drug use. The need for money
may be quantified as the total daily allocation
of performance (money) for the purchase of
the drug, exemplified in Figure 5 as total re-
sponses per day. These same dollars, if exclu-
sively spent on illicit drugs, represent the total
revenues to the drug sellers. Distribution-re-
lated crime, such as smuggling and violent
competition among dealers, likely reflects the
size of this revenue pool that serves as the
reinforcer for engaging in these activities.
Public policy influences on this process may
be categorized as those that focus on reducing
supply (supply-side interventions) and those
that focus on reducing demand (demand-side
interventions). These two aspects of the pro-
cess are inseparable, and public policy should
not be seen as a choice between them. Indeed,
it will be shown below that maximum effects
may require a coordinated application of both
kinds of policies.
Supply-side interventions. Supply-side inter-
ventions are commonly used by government
agencies in the United States, and include
criminal punishment for production, impor-
tation, distribution, and sale of illicit drugs;
confiscation of stockpiles; interdiction of im-
ports; destruction of crops (poppies, coca, and
marijuana); and controls on chemical produc-
tion plants that provide the raw materials for
the drugs. All of these interventions are de-
signed to increase the costs associated with the
supply process, thus moving the supply func-
tion to the right. Given a constant level of
demand, this well have the effect of increasing
the equilibrium price. To evaluate the possible
effects of this change in the market, consider
the demand curve for pentobarbital/ethanol
depicted in Figure 5, which is representative
of demand curves for most drugs studied in
the laboratory (Bickel et al., 1990). Demand
is inelastic across a broad range of prices, here
changing to elastic at a unit price of 32. All
increases in price will tend to reduce con-
sumption (Objective 1), but for price increases
in the inelastic region, the decreases in con-
sumption will be small relative to the changes
in price. In the study illustrated in Figure 5
(Lemaire & Meisch, 1985), an eight-fold in-
crease in unit price from 4 to 32 produced only
about a 55% reduction in consumption.
The response-rate function shown in Figure
5 represents the "total revenues" generated by
the demand curve and indicates that across the
range of unit prices up to 32, revenues to the
sellers increase. Above that price, revenues de-
crease. Given this inverted U-shaped function
for total responding, the effect of a price in-
crease on total expenditures and revenues to
the suppliers will depend on the initial market
price, be it in the inelastic or elastic range of
the demand curve. Only if the initial equilib-
rium price is already quite high (i.e., equal to
or greater than P..) will such a change result
in reduced expenditures and revenues. Oth-
erwise, increased drug prices will increase total
expenditures, which will, in turn, tend to gen-
erate more drug-related crime to obtain money
to meet the higher prices. At the same time,
 BEHA VIORAL ECONOMICS OF DRUG ABUSE 387

DEMAND RESPONSE OUTPUT

0
0
1000
NO FREE
10000I 0

> 100
0
0 0
cc
w ccLU
oL 100
cn
C,
CO-
w CO)
-J z
-J
0
100 I CO)
0
0 cc
0
LL i'U

PRICE ( FIXED RATIO)

Fig. 13. Left panel: Median of 3 rhesus monkeys showing daily food earned in the work session as a function of
price (FR schedule). Three curves are for conditions with no free, or with either one third or two thirds of the baseline
level of consumption at FR 1 provided free after the 12-hr work session. Curves through the points are the best fit of
Equation 1. Right panel: For same conditions in left panel, the total daily responses emitted for food in the work
session, along with the best fitting curves derived from Equation 1. Both panels are in log-log coordinates.

increased supplier revenues will increase the
incentive to engage in supplier-related activi-
ties. These outcomes are all counter to Objec-
tives 2, 3, and 4 stated above. This kind of
unintended consequence has been observed
several times in the petroleum industry; when
petroleum suppliers attempt to reduce pro-
duction and force up prices, the inevitable con-
sequence is an increase in the revenues (and
profits) of the oil distribution companies, be-
cause demand for petroleum by western coun-
tries is relatively inelastic.
Demand-side interventions. The limitations
of price adjustments for influencing drug con-
sumption when demand is inelastic suggests
that a more effective policy would incorporate
methods to alter demand (see Jarvik, 1990).
The previous section on individual drug ther-
apy described approaches to lowering the over-
all level of demand by the individual consumer.
In this section, a public policy approach to
increase the elasticity of demand will be de-
scribed. This approach can be best understood
by analogy to an experiment the author con-
ducted to alter the elasticity of demand for food
by providing a "free" source of food after the
work periods (Hursh et al., 1989). Monkeys
lived in test chambers that provided their total
daily ration of food and water. In the first
phase of the experiment, each work day started
at 6:00 a.m. and ended at 6:00 p.m.; during
the work period pressing a push-plate pro-
vided food according to an FR schedule (water
was constantly available). The price of food
was increased across 21 conditions from an
initial prices of 10 responses to a maximum
price of 372 responses per food pellet. At the
end of the 12-hr work period, free pellets could
be delivered. Three conditions were studied:
one free pellet (baseline), one third of a normal
ration was free, and two thirds of a normal
ration was free. Free pellets were delivered
response independently every 3 s immediately
after the end of the 12-hr work period (sig-
naled by a change in key colors). Consumption
across the 21 price levels yielded a demand
curve under each of the three conditions of free
food. The results are shown in Figure 13. The
median consumption of earned pellets is shown
in the left panels and displays a graduated
increase in curvature or elasticity with in-
creases in the amount of free food. The re-
388 STEVEN R. HURSH

DEMAND 100,000
RESPONSE OUTPUT

NO FREE
10,000 _
a >- 0 O
a
LL
CEO cn
ILJ CO
LJ O 001000 ONE FREE MEAL
11
a.
a (j) 0
8 w
Cc
0

1000
0
FOUJR FREE MEALS

10 100 1000
PRICE (FIXED RATIO)
Fig. 14. Median of 3 rhesus monkeys showing food earned in four daily 1-hr work sessions as a function of the
price (FR schedule). Curves are from conditions with no free food, one free meal, or four free meals (see text for
explanation).

sponse-rate functions in the right panels show
the usual inverted U-shaped pattern, with the
peak of the curve shifting to the left (lower
prices) with increases in the amount of free
food.
In a second phase of the experiment, the
work day was divided into four work periods,
each 1 hr long, distributed from 6:00 a.m. to
5:00 p.m. In the baseline condition, no free
food was presented; in two free-food condi-
tions, either a 20-min free meal (a period of
food available at a price of one response per
pellet) was presented at the end of the 12-
work day or four 5-min free meals were pre-
sented after each 1-hr work period. This last
condition was intended to further increase sub-
stitution by reducing the maximum delay to
food. The results of this phase are shown in
Figure 14. The demand curves for earned pel-
lets show a further increase in elasticity with
the four free meals after each 1-hr work pe-
riod.
The lines through the points in Figures 13
and 14 were fitted using Equation 1 and ac-
counted for an average of 93% of the variance.
As expected, parameter a showed a consistent
increase from 0.004 with no free food to 0.011
with four free meals, indicative of increased
curvature of the demand function. Figure 15
is a composite of the fitted curves showing the
orderly increase in elasticity with increasing
amount and immediacy of free food and the
orderly shift to lower prices of the peak of the
response output functions (Pm., indicated by
arrows).
Providing free food in this experiment is
analogous to providing the community of drug
users a low-cost or free source of drugs, such
as through government-sponsored clinics. The
effects of such "medicalization" of drug use
may be inferred from these results with free
food. Inspection of the functions in Figure 15
indicates that at prices above about 50 re-
sponses per pellet, free food had the effect of
reducing earned consumption at any given price
compared to baseline and reducing total rev-
enues. Further inspection of the response out-
put functions indicate that even if the market
price is adjusted to the peak of the response
output (revenue) function (indicated by ar-
rows), total revenues will drop dramatically
(here nearly a factor of 10) with increases in
free availability of drugs, indicated by hori-
zontal grid lines. This reduction in expendi-
tures and revenues would be expected to re-
duce drug-related crime (Objective 2), reduce
 BEHAVIORAL ECONOMICS OF DRUG ABUSE
DEMAND
COMPOSITE
1000
, 100 a
a
cc L- 1 0,000
w
Ca LUJ
CO
-10 z
w
-J 0
X .
-J CD)
w
0- cr
-,
100 1000
FIXED RATIO
Fig. 15. A composite of the fitted functions from Figures 13 and 14 showing daily earned food (left panel) and
total daily responses in the work session(s) (right panel). Curves are, from top to bottom, no free (12-hr session), one
third free, two thirds free, one free meal, and four free meals. In the right panel, Pm.x is indicated by arrows, and the
peak level of responding is indicated by horizontal grid lines.
the incentive to supply drugs (Objective 3), and
reduce the incentive to engage in risky distri-
bution-related crime (Objective 4). Notice,
however, that all these benefits presume that
the market price is relatively high and beyond
the point of divergence of the demand curves,
here a price of 50. This requirement argues
for continued use of supply-side law enforce-
ment measures in combination with this de-
mand-side intervention to keep the illicit price
high enough that illicit demand will be sen-
sitive to the availability of the free source.
Unfortunately, these positive outcomes come
at some cost. Consider in the free-food exper-
iment just described the total level of food con-
sumption from both sources of food, earned
plus free, shown in Figure 16 (data from a
representative monkey). In all but one case for
this subject, total food consumption was higher
with free food available than without; in gen-
eral, the subjects combined earned food and
free food to "overeat" across all prices of earned
food. In fact, these subjects generally became
quite fat, judging from their body weights. By
analogy, one might expect that in a condition
of both illicit drug availability and clinically
dispensed free drugs, overall drug use will in-
crease, at odds with Objective 1. This would
have the adverse effects of potentially expand-
ing the base of drug users, increasing the gen-
eral level of their use, and further reducing
the productivity of society. In addition, those
crimes that are a direct result of drug-distorted
389
RESPONSE OUTPUT
COMPOSrTE
1000 -
10 100 1000
FIXED RATIO
behavior would also be expected to increase,
such as auto accidents, suicide, and assaults.
Thus, this approach to reducing illicit drug
demand would best be combined with an ag-
gressive and effective program of individual
therapy to reduce the overall level of drug de-
mand (see above).
BEHAVIORAL UNKNOWNS
This explicit and systematic analysis of the
factors contributing to the demand for illicit
drugs serves to highlight some significant un-
certainties for public policy planning that need
further investigation.
Demand elasticity. As indicated above in the
discussion of the effects of price increases on
drug consumption and total expenditure, it is
necessary to know the elasticity of demand in
the vicinity of the current market price to make
a precise prediction of the sensitivity of con-
sumption to price increases and the direction
of change in total expenditure of performance
(money) to obtain the drug. This is because
demand elasticity is not constant, and total
expenditures (and supplier revenues) follow
an inverted U-shaped function. If the market
price is optimally positioned at the point of
maximum revenue for the supplier (P..), then
price increases will lead to proportional de-
creases in consumption and reductions in sup-
plier revenues. On the other hand, if the mar-
ket price is well within the inelastic range, then
price increases will have a proportionately
390 STEVEN R. HURSH
FREE FOOD
BASELINE
a (both financial and social) of government in-
cc
L
a.
cD
LLI
-J
CL
0 tially erroneous presumptions about the eco-
0 nomic processes that govern the drug market.
0
LL
100
10 100
PRICE IN WORK SESSION
Fig. 16. For a representative rhesus monkey from the
studies illustrated in Figures 13 and 14, the total daily
consumption of food from both work sessions and free
sources, in log-log coordinates. Baseline consumption,
shown as the heavier line, is without any free food; open
symbols indicate total consumption including free sources.
smaller effect on consumption and will lead to
an increase in user expenditures and supplier
revenues.
Similarly, the effectiveness of a government-
sponsored medicalized program of distribution
to increase demand elasticity will also depend
on the market price (see Figure 15); if market
price is low, relative to the new alternative,
one might predict little, if any, change in de-
mand elasticity and the frequency of use of
illicit drugs. Thus, without knowledge of con-
sumer demand and market price, there is no
way to predict with any confidence whether
specific public policy interventions will in-
crease or decrease drug use, drug-related crime,
and supplier revenues. The formulation of
public policy in the absence of this information
is analogous to formulating tax policy in the
absence of knowledge of the tax base and seems
at best ineffectual, and at worst, counterpro-
ductive.
Unfortunately, the inverted U-shaped ex-
penditure-revenue function virtually guaran-
tees that drug policy will be controversial. For
any selected level of drug expenditures, there
are two prices that produce the same level of
total funds expended, a low price and a very
high price. The choice between policies, then,
may hinge on judgments about other factors
that accompany movement toward lower or
higher prices, such as the overall level of con-
sumption and related effects on society, the cost
terventions, and ethical issues, such as those
associated with a program of medicalization
that would use tax revenues to subsidize habits
that many regard as offensive, immoral, or
unhealthy (see Gallup & Gallup, 1988). An
economic analysis makes a positive contribu-
tion by disentangling these issues from poten-
Supply elasticity. The effectiveness of gov-
ernment-sponsored competition would be
modulated by the elasticity of supply and the
capacity for market prices to adjust to changes
in market conditions. If wholesale costs are
relatively low, if the threat of punishment is
low, and if the supply of illicit drugs or raw
material is plentiful, then the market price of
illicit drugs may be able to adjust downward
to maintain a competitive edge. Furthermore,
market prices do not have to match those of-
fered under a government-sponsored program
because of the inherent nonsubstitutability of
the two sources. The government clinic would
provide the benefits of a pure drug at a reliable
dose, but the illicit suppliers can make their
product more readily available at any hour and
without arbitrary limits on dose. Judging from
the effects of time delay shown in Figure 14
(one vs. four free meals), an illicit source that
provides more immediate availability in a so-
cially supportive environment would offer stiff
competition for a government clinic that may
have set hours of operation, certain limits on
daily dosage, and other bureaucratic incon-
veniences (forms to be filled out, painful blood
tests, and waiting lines).
Product innovation. Further, the drug supply
system should be viewed as an active compet-
itor; it is unlikely that illicit suppliers will
stand idle while they are put out of business
by government-sponsored clinics. In the legal
marketplace, when competition from a new
source occurs, one typical response to prevent
effective competition is to engage in product
innovation, that is, make your product distinct
and nonsubstitutable from that available from
the competition. Advertising focuses on these
unique features and persuades the consumer
that the competition provides an inferior prod-
 BEHAVIORAL ECONOMICS OF DRUG ABUSE
uct. In the drug trade, this kind of innovation
will lead to new "designer drugs" or drug com-
binations with higher abuse potential, a stron-
ger "kick," or longer lasting effects, with little
concern for long-term user safety.
Aggregate versus individual demand. During
the foregoing discussion, we have extrapolated
predictions about market demand from obser-
vations of individual demand. This assumes
that the aggregation of demand curves from
individuals introduces no new processes or
variables. There are two ways in which this
assumption may not be valid. First, the elas-
ticity of demand of an aggregation of demand
curves may not be as inelastic as each individ-
ual curve; this is an empirical question. Sec-
ond, the level of demand of the aggregate is
not fixed, as is the level for any given individ-
ual. Thus, one response to government policies
to reduce individual demand is to expand the
market to new communities where resistance
to drug use is lower and availability of gov-
ernment competition is low. These new mar-
kets will, in turn, force further government
involvement and an escalation in the cost of
the government-sponsored program.
Supplier competition. Reductions of demand
and pressures to increase price will likely lead
to heightened competition among drug sup-
pliers for the diminishing market. In the legal
marketplace, such competition is expressed in
sanctioned marketing techniques-advertis-
ing, sale prices, rebates, and product innova-
tions. In the illegal marketplace, less benign
forms of competition prevail, including mur-
der, extortion, and product fraud. All these by-
products must be anticipated by any effective
public policy intervention that reduces demand
and/or increases price.
A STRATEGY FOR PUBLIC POLICY
FORMULATION
It is clear that an empirical approach to
public policy formulation in the sphere of drug
abuse will require an extensive knowledge of
both the principles of behavior and the pre-
vailing dynamics of the illicit drug market.
Figure 17 diagrams an overall strategy for
public policy formulation and implementation.
At the primary level is the need for expanded
basic research on the principles that govern
drug use from laboratory and clinical settings.
Based on the knowledge of these basic pro-
cesses, we can then formulate the critical un-
391
Laboratory Laboratory Clinical
Non-Human H n Research
Fig. 17. Flow chart illustration of behavioral economic
strategy for public policy formulation and implementation
based on data and analysis from laboratory, clinical, and
econometric studies and from practical applications in ex-
perimental model projects.
knowns that are important for prediction of
policy outcomes. This establishes the goals of
an econometric analysis of actual drug use in
the natural marketplace. A program of mon-
itoring of drug-use patterns and market prices
would establish approximations of demand
elasticity for prediction of policy impacts.
However, even the most ambitious economet-
ric program will be difficult and prone to error
because the details of supply, distribution, and
use are deliberately hidden to avoid criminal
prosecution. Thus, any public policy formu-
lation based on this knowledge must be con-
sidered tentative. To avoid error on a large
scale, experimental model projects should be
undertaken to test creative solutions and novel
public policy initiatives. Coupled with each
such project should be an extensive program
of evaluation and improvement. Only after
several iterations of evaluation and modifica-
tion should the methods of a model project be
proposed for general application. Even then,
because of the uncertainties of scale and the
diversity of settings, public policy must be for-
mulated and implemented with provisions for
self-evaluation and correction without the need
for new legislation.
The strategy envisioned is a self-correcting
one. The results of evaluations serve as feed-
back to the policy formulation process and to
the research community for needed investi-
gations to improve approaches. Provisions are
392 STEVEN R. HURSH
needed to insure that the system can adjust
rapidly to this feedback. Studies of behavior
in the laboratory clearly show that delays im-
posed between changes in behavior and changes
in the controlling environment can lead to un-
intended effects on subsequent behavior.
Therefore, an effective behavioral economic
system for influencing the dynamic drug mar-
ket will require an especially responsive bu-
reaucracy with minimal feedback delays.
CONCLUSIONS
Behavioral economics may be defined as a
special application of behavior analysis that
emphasizes environmental and biological fac-
tors modulating the total allocation of perfor-
mance to available reinforcers. When the com-
modities of interest are drug reinforcers, this
method of analysis provides a consistent con-
ceptual framework for quantifying the strength
of drug self-administration in laboratory sub-
jects, for evaluating interactions between drug
and nondrug reinforcers, for designing and in-
terpreting the effectiveness of drug abuse in-
terventions in humans, and for formulating
public policy to deal with drug abuse.
These separate domains can be seen as part
of an overall strategy that would draw on the
findings from laboratory research and natu-
ralistic econometric investigations to design
model intervention projects. Evaluation and
improvement of these projects would then serve
as small-scale test-beds for more general public
policy initiatives. This empirical and behav-
ioral approach to public policy in the sphere
of drug abuse is representative of a more gen-
eral behavioral system for the design of culture,
as anticipated by Skinner (1953). If future
work confirms the utility of this behavioral
economic agenda, then we have made the first
step toward the development of a more humane
society.
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Received May 18, 1991
Final acceptance May 29, 1991