Is this a good idea? Today's Times runs an article on welfare policy in the United States which contains the following blurb about (unnamed) state-level officials:

[State] officials seek more freedom to tailor their programs to local needs. They want to expand the definition of work to include more vocational education and drug treatment...

Expand the definition of work to include drug treatment for welfare purposes? My natural reaction to this is very negative: an honest day's work does not include rehab!

After a conversation with angela, though, I grew convinced that my natural reaction misses the point. There are many reasons why its better for society to have drug addicts attend rehabilitation clinics: it lowers crime, hurts the drug trade, and less addicts on the streets translates into better neighborhoods. While it might seem strange to label rehabilitation treatment as honest work, ultimately all we are talking about is a financial incentive to get better.

One obvious objection is that a program of this sort creates perverse incentives: a casual drug user running out of money might go on a binge and show up at a rehab clinic to collect welfare. This argument, though, is flawed: rehab counselors are generally good at separating the addicts from the sometimes-users, and it hardly makes sense for a casual user to go on a binge which will result in an addiction for a few months of welfare; the consequences of addiction are far more severe than that.

Moreover, its not so clear that we can even use the language of economics and talk about financial incentives when it comes to drugs. Research into drug policy has shown that drug users do not respond to incentives rationally. For example, during the period 1980-1999, the US government has remarkably stepped up its enforcement of drug laws; one would expect that, as a result, drugs prices would rise because drugs would be more difficult to smuggle; but in fact, prices have fallen 70-80% -- a phenomenon no one can quite explain. See this paper for an exploration of the irrational behavior of drug users.

Having said that, I am still not sure that giving welfare to those in rehab is a good idea: the success rates of rehab programs are about 20%. Therefore, 80% of money would be wasted right off the bat; worse than wasted, in fact, since it would likely be used for the purchase of drugs, undermining the very point of such a program.