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Dual-Edged Benefits of Drug Policing: A Quarter Century’s Lesson from a Heroin Drought

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Abstract

We develop a strong triple-difference design, with variation across crimes and areas, to quantify the impact of Australia’s 2001 heroin shortage on crime, providing precise and uniform evidence on both the immediate and long-term effects of drug law enforcement. Applying the design to 25 years of monthly postcode data,we show that crime experiences an 8.4 percent surge in the first month, followed by a 1 percent decrease every 13 months, resulting in a roughly 23 percent reduction in crime by 2019. At long-run levels, this implies an annual reduction in crime costs of around AUD 2.21 billion (2020 AUD), highlighting that the bene-fits of supply-side drug policies are significant and often underestimated because of their delayed realization. We conclude that supply-side policies have a more substantial role in reducing drug-related harm than is conventionally assumed

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