Welfare reform and drug use

The New Zealand Drug Foundation wrings its hands about potential changes to New Zealand's welfare rules:

The Drug Foundation says punitive measures being considered against drug users who are on benefits could exacerbate poverty, increase crime and harden substance dependency.

It is so concerned about the Welfare Working Group's "flawed populist assumptions" about substance abuse that it is urging the Government to work with mental health and addiction specialists when considering its recommendations.

The group wants strong rules and obligations for drug and alcohol use by beneficiaries, enforced by a graduated sanctions regime.

Drug and alcohol-dependent beneficiaries would be offered free treatment services and those who failed drug or alcohol tests would face cuts to their benefits and a 13-week stand-down for the third offence.

Hope Corman visited Canterbury's economics department a couple of years ago. She found pretty strong evidence that American welfare reform, which included sanctions for drug use, strongly reduced drug use. Here's her NBER working paper:

Exploiting changes in welfare policy across states and over time and comparing relevant population subgroups within an econometric difference-in-differences framework, we estimate the causal effects of welfare reform on adult women’s illicit drug use from 1992 to 2002, the period during which welfare reform unfolded in the U.S. The analyses are based on all available and appropriate national datasets, each offering unique strengths and measuring a different drug-related outcome. We investigate self-reported illicit drug use (from the National Surveys on Drug Use and Health), drug-related prison admissions (from the National Corrections Reporting Program), drug-related arrests (from the Uniform Crime Reports), drug-related treatment admissions (from the Treatment Episode Data Set), and drug-related emergency room episodes (from the Drug Abuse Warning Network). We find robust and compelling evidence that welfare reform led to declines in illicit drug use and increases in drug treatment among women at risk for relying on welfare, and some evidence that the effects operate, at least in part, through both TANF drug sanctions and work incentives.

The paper was also written up in the Wall Street Journal.

So I really hope that the government takes the Drug Foundation's recommendation and consults with specialists. In particular, they should fly Hope Corman back to New Zealand. It would be great to see her again.