Lies, Damn Lies

By Phillip Smith, DRCNet. Posted February 28, 2002.

It has been almost a month since the White House Office of National Drug Control Policy (ONDCP) issued a breathless press release trumpeting an update to research on the economic impact of drug abuse. "Illegal Drugs Drain $160 Billion a Year from American Economy," shouted the headline on the press release. "Drug Czar Details 'Direct Threat' to US Economic Security," it continued.

The press release, touting "The Economic Costs of Drug Abuse in the United States, 1992-1998," which purports to precisely calculate the impact of drug use on the economy, continued with dire warnings from newly-appointed Drug Czar John Walters. "Illegal drugs are a heavy drag on the American economy," said Walters. "This new report proves that the costs of tolerating drug use can be measured directly in dollars lost, work hours missed, and pink slips handed out. Drugs are a direct threat to the economic security of the United States," he continued. "This study provides some grim accounting, putting a specific dollar figure on the economic waste that illegal drugs represent."

No major media outlets bit at the drug czar's press release, but readers can rest assured that they will be hearing that figure in the future. Like other imaginary numbers, such as the mysterious "50,000 annual deaths from drug abuse," the $160 billion economic cost figure is sure to become another arrow in the quiver of drug war propagandists.

The study's authors break the costs down into three broad categories -- productivity losses, health costs, and "other," primarily crime-related, costs -- and then breaks down losses within each category. Productivity losses, for example, include losses from premature death, drug abuse-related illnesses, institutionalization and hospitalization, crime victims' loss of productivity, and losses due to incarceration and criminal careers. Productivity losses constitute 69percent or $110 billion of the study's calculated $160 billion total costs. "Other" costs, as noted above, are primarily law enforcement-related, and include criminal justice system funding and private costs, such as private legal defense and property damage to crime victims. These costs amounted to 22percent of the total estimated costs of drug abuse. Looking at such figures, drug abuse does indeed appear to be a detriment to the US economy.

There's only one problem: The study is bunk. It is rife with methodological problems and questionable assumptions, but one huge flaw, admitted by the authors, screams out at the serious reader: The study conflates the economic costs of "drug abuse" (which in fed-speak means any use of proscribed drugs) with the costs of enforcing prohibition. In other words, if you are arrested for smoking pot, the wages of the police officer who arrested you, the district attorney who prosecuted you, the judge who sentenced you, the guards who jailed you, the functionary who drug-tested you, and the parole officer who supervised you all become part of the cost of drug abuse. And the fact that you could not work while you were in jail? Those lost wages are also considered a cost of drug abuse, not prohibition.

The study's authors admit this up front: "In the context of this report, the phrase 'drug abuse' is used to refer to the consequences of using illicit drugs, as well as societal costs pertaining to the enforcement of drug laws."

But don't count on President Bush, Drug Czar Walters or their fellow drug warriors to make that distinction. Instead, be prepared to hear the number repeated like a mantra whenever drug policy is on the agenda.

"This is a piece of propaganda that demands to be answered," said David Duncan, chairman of the National Association for Public Health Policy's Council on Illicit Drugs. "I think the study is useful only if you assume at the outset that the current prohibitionist policy is the only reasonable policy to pursue," he told DRCNet. "On the other hand, if you understand that many of the costs are related to drug prohibition and not directly to drug use, then the study is less useful. This study fails to disaggregate drug abuse costs and drug prohibition costs, but the fact is that prohibition itself creates the law enforcement costs and increases the health care and productivity costs," said Duncan.

"That's a problem only for someone interested in what costs would look like without all that enforcement," said Dr. Peter Reuter, founder of the RAND Drug Policy Research Center and currently professor of public affair and criminology at the University of Maryland. "But the question the study poses is what, under current policy, is the cost of drugs, including drug control," Reuter told DRCNet.

Boston University economics professor Jeffrey Miron was not as sanguine as Reuter. "This study is completely useless," said the researcher on drug market economics. "It is totally tautological to say that the money we are spending on drug enforcement is a cost of drug use. That's crazy," he told DRCNet. Miron also had a harsh word for the study's authors, who were careful in the fine print to note some of the study's problems. "The authors still have to know that their work will be used for propaganda purposes, so they deserve to catch some flack, too," said Miron.

Aside from the fundamental flaw of including prohibition costs as part of drug abuse costs, the study is replete with serious methodological problems, say all three experts.

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