Note on Two Abuses: Drugs and the Pareto Criterion

Abstract

This paper shows, by example, how easy it is for an imaginative economist to manufacture plausible assumptions about individual cognition, even when the set of assumptions is limited to those which conform to the economic paradigm of individual rational choice. It examines a recent article which employed the Pareto criterion to discard classes of arguments in favor of using social policy to control drug abuse. It attempts to show that assumptions which seem realistic can be used to rescue each of the arguments which were discarded. The point that is made is not that social policy should be used to control drug abuse but that economists can do little in this field but provide a means for logically analyzing the problem.