Vicky Pryce, who was jailed for swapping speeding points with ex-husband Chris Huhne, has called for a "different approach" to tackle drug-related crime - although she fell short of calling for decriminalisation.
The leading economist, who was released in May after serving two months of an eight-month sentence for perverting the course of justice, said that helping addicts stay off drugs was a better way than imprisonment.
The Greek-born mother-of-five, who was speaking at an event at the Cheltenham Literature Festival to promote her new book, Prisonomics, said society should be worried about the number of people imprisoned for drugs offences.
"On the decriminalisation of drugs... evidence-based policy, absolutely. Obviously the decriminalisation of some types of drugs would help," she told the audience.
"What girls felt, who were in there, particularly the ones found with drugs in their pockets, was just ... something like 'yes, I was going to share it with my friends'. They're immediately assumed to be dealing in drugs.
"Then there's a lot of serious resentment of ending up in prison when your friend next door also had all of these drugs in their pockets, which are not very serious drugs, and then the waste in their lives and they have a criminal record forever, or for a very long period of time, until that conviction is spent.
"Prison has given them nothing at all to help them - quite the opposite. So a different type of approach to people taking drugs is the thing that we absolutely need.
"I am not condoning in any way anyone actually dealing in drugs at all or even taking them, frankly. A large number of people who are in prison right now on drug offences is something that should worry us.
"If decriminalisation up to a point makes a difference then that would obviously be helpful. I have seen some of the damage done to people's brains just smoking marijuana over a period of time. So I hesitate to say I agree with that entirely.
"I have to admit that I have seen people deteriorate, young kids deteriorate. I have had young children myself and I have seen their friends, so I'm not completely, don't really know, whether I would condone that completely.
"But actually treating (people)... slightly differently and focusing on help rather than imprisonment may be a better solution."
Ms Pryce's book, which is published on Monday, is a mixture of an economic analysis of imprisonment and her own experiences at Holloway and East Sutton Park Prison, near Maidstone, Kent.
During the hour-long session, Ms Pryce refused to answer any questions about her ex-husband or the events surrounding her trial.
Ms Pryce said that it costs on average £56,000 a year to keep a woman in prison but community-based punishments cost between £1,600 and £7,500 a year.
"We are paying an awful lot of money to keep people in prison when we could be saving huge, huge amounts - hundreds of millions of pounds - and at the same time reduce offending," she said.
"Offending costs society I calculate between £9.5 billion and £13 billion a year, so just reducing offending a bit saves us an awful lot.
"You have got to bear in mind that the public wants punishment and politicians will generally not gain any favours by being very libertarian in this area.
"What they haven't done is really look at the cost-benefits. Looking at the data actually confirms it and shows the waste that exists in prison. Basically our system isn't really fit for purpose."
She was also asked about the release of Tracey Connelly, the mother of Baby P, who was jailed indefinitely with a minimum of five years in May 2009 for causing or allowing her son Peter's death.
"I am not necessarily going to give a view on that particular case because I haven't really looked at it particularly," Ms Pryce said.
"But what I do know is the difficulty a number of women I met have after everything that has been written about them in the press and the way they have been described and going back to their own community is very, very hard.
"The problem, of course, for women in particular is that because of children or other things they have, because of their dependencies in terms of who's looking after them or paying for them, they are stuck and often go back to where they came from.
"I am taking about short term prisoners. Whereas men are much more mobile - women have many more people depending on them.
"It is very, very hard when you come out. Prejudice is huge but in some communities they are just not welcome back at all. It is considered, particularly in some religions, that if you are offending you are also offending against your religion and it's a no-go area for you.
"I sympathise in a way with the problems women have going anywhere and starting a new life again once they leave prison."
And describing her first day at Holloway, she said: "On the first day as I walked down the corridor I could hear people saying, 'there's Vicky Pryce coming', and girls would come out of their cells and hug me.
"It was just an extraordinary thing. I'm not going to say what I think but they didn't think I should be there, which is quite interesting.
"They were certainly very helpful from day one. I was freezing cold with this one little blanket on the bed and the first room they put me in there were no curtains.
"Suddenly all these blankets started appearing. First of all the girls moved me to another room and found me a better TV as well.
"And they started bringing me blankets. So within a few minutes I had an extra five blankets and they weren't supposed to do that, so they were sort of hiding them as they walked down the corridor.
"They even carried on doing that after the door was locked and they were putting them through the hatch and I'd have to say 'stop it I have got enough thank you very much'. So I sent the sixth one way."