The debate over the legalization of drugs brings up many issues that we have to consider when we think about crime prevention and how aggressively to try to prevent crimes. Let us look at a few of the issues that it brings up.
As you mention, the economic costs are a real factor that must be considered in connection with this issue. With respect to the legalization of drugs, we can say that costs are a major reason why we would want to pursue legalization. The costs of incarcerating drug offenders are very high. So are the costs of pursuing drug traffickers and trying to interdict drug shipments. All of these costs would be negated if we would legalize drugs.
The issue of benefits is much harder to understand clearly when it comes to drugs. There are some crimes for which the benefits of prevention are clear. If we prevent theft and burglary, we save people money because they do not have their possessions stolen. If we prevent rapes and assaults, we benefit people both physically and emotionally. In both of these cases, we are providing a benefit to some people by protecting them from harm caused by others. In the case of drugs, this issue is much less present. When a person buys and uses drugs, that person is voluntarily harming him or her self. This makes it much harder to argue that we are providing a great benefit to any innocent parties if we arrest and incarcerate drug dealers.
There is one final issue to consider, and that is morality and/or social standards. When we criminalize a given activity and try to prevent that activity, we are stating that it is outside of the bounds of what we consider to be acceptable behavior in our society. Legalizing drugs might send the message that drug use is something of which we, as a society approve. This might not be a good message to send.
Thus, when we think about crime prevention, the main issues to consider are costs, benefits, and what our policies say about our values as a society.