Mark Kleiman, 1951-2019

Normally on this blog I only mark the passing of famous economists, but I'll make an exception for Mark Kleiman, who was a professor of public policy at NYU, and was most famous for his work on drug policy. In fact, I referenced a blog post by Kleiman in a post last year on the economics of fentanyl.

Gabriel Rossman at National Review has an excellent article that captures some of Kleiman's key contributions:

Market failure and high transaction costs are policy successes when the commodity is poison, and so good policy means encouraging bad market design. For instance, Kleiman favored a noncommercial approach to marijuana decriminalization precisely because he expected nonprofit or state-operated dispensaries to be less efficient than for-profit firms, and in particular less likely to grow the user base through advertising and make intense use more convenient. The billboards advertising dispensaries, and even marijuana delivery, that saturate Los Angeles are exactly what Kleiman thought sensible decriminalization should avoid.

But just as good market design has to be careful, so does deliberately bad market design. A major argument in Against Excess is that if you make selling drugs risky by locking up drug dealers (or encouraging them to shoot each other over territory), you build in a risk premium to the price, which draws in suppliers who don’t mind risk. The better approach is to create a deadweight loss so you don’t encourage more supply. For illegal drugs, make it a time-consuming hassle to score. For legal drugs like tobacco and alcohol, impose stiff excise taxes. In both cases the consumer faces costs that do not benefit, and therefore encourage, sellers. These costs might not discourage addicts in the short run, but long-run demand is relatively “elastic”: Increased costs from hassle or taxes can discourage potential users from starting and encourage existing addicts to quit.

Those are insights that I have used in my ECONS101 and ECONS102 classes. Rossman also highlighted some additional contributions that I probably should make more use of:

Jointly tackling mass incarceration and crime was the aim of his most famous book, When Brute Force Fails. At a theoretical level, the book is an argument that Gary Becker’s economic theory of crime must be radically reconceptualized in light of behavioral economics. Becker argued that deterrence was the expected value of punishment, defined as the probability of punishment times its severity, which has the practical upshot that we can achieve deterrence by punishing infrequently but severely. However, behavioral economics suggests that people aren’t good at reckoning unlikely-but-severe outcomes — and if ever there were a group of people who live for the moment and ignore the future, it would be those who are either intoxicated or addicts looking to score. (Contrary to popular myth, relatively few prisoners are incarcerated for non-violent drug offenses, but many violent and property offenses are committed while intoxicated or to acquire money for drugs.) This implies that a ten-year prison sentence won’t have much more of a deterrent effect than a five-year sentence would. In practice, extremely long sentences serve not to deter crime, but to induce plea bargains and incapacitate criminals throughout their prime-offending young years — and beyond.

When Brute Force Fails is an important book not just for contributing to a theoretical dispute, but also for its empirical evidence and practical solution: mild but extremely consistent punishments, the opposite of Becker’s approach.

Given that I make a lot of use of Becker, and of behavioural economics, the juxtaposition of the two seems like something that would work well in future.

You can read more about Kleiman in this article by German Lopez on Vox, and here is the New York Times obituary.

[HT: Marginal Revolution]