Dual-edged benefits of drug policing: a quarter century's lesson from a heroin drought

This record contains the author-accepted manuscript (post-print) of: Sergey Alexeev & Don Weatherburn, “Dual-edged benefits of drug policing: a quarter century’s lesson from a heroin drought”, Journal of Law & Economics, vol. 69, February 2026. The typeset publisher version appears in that issue of the Journal of Law & Economics. We develop a strong triple-difference design, with variation across crime types and areas, to quantify the impact of Australia’s 2001 heroin shortage on crime. Using 25 years of monthly postcode-level data for New South Wales (1995–2019), we provide precise and uniform evidence on both the immediate and long-term effects of drug law enforcement. Crime in high-heroin areas rises by about 8.4% in the first month of the shortage, but then falls steadily by roughly 1% every 13 months, yielding an overall reduction of about 23% by 2019. Translating these effects into monetary terms implies an annual reduction in crime costs of roughly AUD 2.21 billion (2020 prices), suggesting that the long-run benefits of supply-side drug policies are large and often underestimated. Key features of the study Uses a comprehensive panel of all recorded crimes in 456 NSW postcodes from 1995–2019. Distinguishes instrumental crimes (committed to raise money, such as theft and robbery) from expressive crimes (such as assault and malicious damage). Employs a triple-difference Poisson model with rich fixed effects to separate the heroin shortage’s impact from broader trends in policing, the economy and other policy changes. Documents an initial short-term spike in crime as dependent users adjust to higher prices and reduced purity, followed by a persistent long-run decline. Shows that property and robbery offences, most closely linked to heroin use, account for the bulk of the crime reductions and monetary benefits. Provides evidence that sustained supply-side interventions, when they genuinely reduce availability, can play a larger role in reducing drug-related harm than is commonly assumed. The PDF here matches the final author-accepted manuscript and may differ in minor ways (formatting, copy-editing) from the journal’s typeset version.