hundi for opium

Historical records from British India offer a new look at the economics of drug use—which can otherwise be difficult to study.

“You can’t simply go to Wal-Mart and look at the sticker price, and people don’t want to talk to you because drugs are illegal and they think they’ll get in trouble, ” says Siddharth Chandra, an economist and professor at Michigan State University.

“Our study is the first time the subject of how populations of consumers switch between drugs is being studied with data considered reliable.”

To find reliable economic data on drug use, Chandra, also the director of the university’s Asian Studies Center, had to look back to early 20th century India, when the region was still part of the British Empire.

“One hundred years ago these products were legal. In British India the government was actually selling these things to the public, and they kept meticulous records,” Chandra says.

weighing opium in India
(Credit: Shyamal via Wikimedia Commons)

In his study—the first of its kind—Chandra pored through stacks of 100-year-old ledgers, called Excise Administration Reports, kept by the governments of the various provinces of India. Interpreting these data, he found surprising results about the economics of drug use behaviors.

Despite the stark differences in the effects of opium vs. cannabis on the human body, the study shows that users would switch between the two drugs when the price of one went up—in economics, a phenomenon called substitution.

“The time, place, and context are different, but the phenomenon is there. You might think consumers would treat them differently,” Chandra says. “But just because the two drugs used are very different, doesn’t mean people won’t switch.”


Opium and cannabis have different effects on users, but those differences only came into consideration when analyzing cannabis in its weakest form, a drug called bhang, which consumers would not substitute for the more potent opium.

“There are many policy implications for these results,” Chandra says. “Targeting a particular drug with policies and enforcement might backfire.”

Chandra points to the epidemic of heroin, a product of opium that is relatively inexpensive and is devastating some communities in the United States.

“Many people know someone who has been affected by heroin—it is a very dangerous drug,” Chandra says. “But prohibiting harmful drugs selectively can be ineffective. Consumers may switch.”

Chandra worked on the project with Madhur Chandra, a postdoctoral fellow in the department of epidemiology and biostatistics, supported by the National Institute on Drug Abuse of the National Institutes of Health. The study appears in the journal Drug and Alcohol Dependence.