Drug addictions are often viewed as compulsive behaviors that are not sensitive to the typical rules of self-discipline or market forces. Nonetheless, many governments attempt to discourage the consumption of addictive substances through macro policy tools, such as taxation, regulation, and prohibition, with the goal of reducing the harmful consequences of substance abuse. The government's ability to discourage substance-abusing behavior through these macro policies depends on the responsiveness of addictive consumption to market interventions. There are several shortcomings inherent in economic analyses of addictive behavior that have led many to question the value of the findings from this literature. The most obvious pitfall is the fact that economists generally work with large pre-existing data sets that often consist of aggregated data or insufficient data on individual behavior. This makes it impossible for economists to control for all relevant aspects of the individual's environment. Ongoing work has taken advantage of a number of new micro-level data sources that do collect more detailed information on the individuals, their families, their neighborhoods, and their schools. The findings from these ongoing studies will be helpful in refining the economist's understanding of the impact of these environmental influences on substance use and abuse. In addition, econometric techniques have become increasingly more sophisticated, so as to enable economists to control for factors that are not observed in the data they use, but are likely to influence behavior. The findings from these studies clearly show that even addictive behaviors are sensitive to changes in the price of the substances being abused. When the full price of the addictive substance increases, consumption of that substance declines, even among abusers; therefore, public policies that increase the full price of a drug to a consumer, particularly youth, are likely to result in long-term reductions in rates of addiction. 1 figure and 72 references