EERC Vice Resident

Jim Leitzel Photo from an early

May 21, 2016 EERC Workshop [Before]

Kyiv, Ukraine

Mill’s Harm Principle and Vice

• High taxes

• Seller licenses

• Advertising, hours of operation controls

• Buyer licenses

• Personal prohibitions

Photo AFTER 40 EERC Workshops =>

• Happy 210th Birthday, J.S.!

(born May 20, 1806)

The Robustness Principle

• Ignorance about the rationality of vice-related decisions suggests that policies should work pretty well irrespective of the extent of rationality.

• Prohibition of a vice is inconsistent with robustness; so is laissez faire, a free market. Nudges are fine, though….

Legal Recreational Cocaine 1!

• A Double Default System

• The First Default: You are Not Eligible to Purchase Cocaine

• If you are of age, you can choose to override the default

• Pass a test, pay a fee, acquire a cocaine buyer’s license

• Behave well, Misha, or you will lose your cocaine buyer’s license

Legal Recreational Cocaine 2!• The Second Default(s): You Can

Only Purchase Cocaine in Moderate Doses

• Prices, Quantities, Waiting Periods – the default settings on all of these are aimed at enforcing modest consumption

• At some cost, you can override these default terms for more liberal access

• Cocaine tea is quite popular, Denys!

Legal Recreational Cocaine 3!• Longer waiting periods, smaller

quotas, more dilute preparations: we will subsidize these departures from the second set of defaults

• Care for a cocaine-free January? –we will help enforce it for you

• Concerned that you might apply for a cocaine buyer’s license next year, or, if you have a license, concerned you might choose more liberal access? You can self-exclude, voluntarily relinquishing these possibilities for five years, say

• Shadow puppets can be addicting too, eh, Sasha?

For More, uh, Buy My Book*From page xii: “The Economics Education and Research Consortium (EERC) has been a sort of second home for more than fifteen years. EERC sponsors two workshops annually in Russia or Ukraine, and the overlap between frequent workshop participants and my academic and personal friends is staggering. This pleasant intersection includes Mike Alexeev, Rick Ericson, Shlomo Weber, Diana Weinhold, Gary Krueger, Judy Thornton, OlenaNizalova, Tom Coupé, Irina Murtazashvili, OleksandrShepotylo, David Brown, Ted Gerber, Russ Pittman, Natalya Volchkova, Victor Ginsburgh, Vladimir Popov, Denys Nizalov, John Earle, Eric Livny, VolodymyrVakhitov, and David Tarr. Iryna Sobetskaya and Natalia Bystrytska have administered the EERC with care and grace; their tireless efforts and their cheerful presence have made the EERC the welcoming place that it is.”

*or download “Double Defaults: Behavioral Regulation of Cocaine,” February 2016, from ssrn.com

A 1.5 Minute Indulgence