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

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 benefits 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.