Legalization of Narcotics in Sweden - A Cost-Benefit Analysis

Abstract: The objective of this report is to estimate the full economic consequences of legalizing all narcotics in Sweden. This will be done with a cost-benefit analysis. The main parts examined is changes to crime and the criminal justice system, consumer surplus, government revenue from sales, costs to public services mainly in the form of health care, but also emergency services and institutional care and loss of production. The result of the analysis is dependent on how consumption of narcotics would change after a legalization. By looking at previous research, we find no clear evidence that a legalization would result in a significant increase in consumption, keeping the price level at the same level as before the legalization, with the help of taxes. We find that a legalization should result in discounted net benefits of 485 billion SEK or annual net benefits of 14.5 billion SEK. The main benefits are reduced expenditures to the criminal justice system and reduced cost to victims of crime because of less crimes in society. The conclusion of the report is that a legalization of narcotics in Sweden will increase overall economic efficiency, and the policy advice is therefore to legalize narcotics in Sweden.