11/5/23, 12:05 PM DP Economics: The fentanyl crisis in the US

 Search
 Log in |  Subscribe / Renew |  Free trial |  Newsletters

If you are a student, stop now!

Only teachers can take out free trials or subscriptions to our subject sites at www.thinkib.net

In line with the IB Learner Profile, "Act with integrity and honesty".

If you are a student and wish to access these resources, ask your school to subscribe.

Alternatively, sign up to our sites at www.studyib.net which are specifically designed for self study and
revision.

I confirm I am a teacher

Log in
Username
Password 
Forgot your password?

 Log in

Log in with ManageBac

Log in with ManageBac China

The fentanyl crisis in the US

Monday 25 September 2023

The United States is experiencing a wave of drug-related deaths from the drug fentanyl. It is a
prescription drug that is used to treat people with severe pain, particularly after surgery. But
fentanyl is being increasingly used as a recreational drug. Fentanyl is a synthetic opioid 50 times
more powerful than heroin.

https://www.thinkib.net/economics/blog/50831/the-fentanyl-crisis-in-the-us- 1/2
11/5/23, 12:05 PM DP Economics: The fentanyl crisis in the US
Last year nearly 100,000 people in the
US died of a drug overdose in the US with
over 60 per cent related to people taking
fentanyl.

The economic theory surrounding fentanyl,

like other recreational drugs, is the concept
of merit and demerit goods. This theory
was first published by the American
economist Richard Musgrave in his paper,
"A Multiple Theory of Budget
Determination," published in 1957.
Musgrave argued that merit and demerit
goods led to market failure which provided
a strong case for government intervention.

As a demerit good, fentanyl leads to market failure through the consumption negative
externalities associated with users taking the drug for recreational purposes. For example, people
who take the drug are likely to be less productive at work and their medical treatment for the
negative health consequences of taking the drug is a drain on a country’s health service. The
other case for government intervention in the fentanyl market is the government's desire to
protect the population from the negative consequences of taking the drug.

It is worth pointing out that fentanyl can also be considered a merit good when it is viewed in a
medical context as a pain relief drug.

The problem with government intervention in the market for recreational drugs and in this case,
fentanyl is that it is fraught with difficulties. Making drugs illegal means their provision goes to
criminal producers in the parallel market which brings its own costs in terms of crime and drug-
related violence. Any product produced in the parallel market is also likely to be more harmful to
consumers because the manufacture and distribution of the good is unregulated by the
government.

Governments around the world struggle to deal with the challenge of recreational drugs and the
problems highlighted by the fentanyl crisis in the US.

Possible questions to discuss with a class

1. Why is fentanyl sometimes considered a merit good and at other times a demerit good?

2. What are the negative externalities associated with fentanyl?

3. Why is it difficult to control the supply of recreational drugs like fentanyl?

 Shrinkflation and skimpflation The use of AI in supermarkets 

11 Sep 2023 9 Oct 2023

https://www.thinkib.net/economics/blog/50831/the-fentanyl-crisis-in-the-us- 2/2