The most embarrassing graph in American drug policy

May 29, 2013

When it comes to drugs, it's all about prices.

The ability to raise prices is-- at least is perceived to be--a critical function of drug control policy. Higher prices discourage young people from using. Higher prices encourage adult users to consume less, to quit sooner, or to seek treatment. (Though higher prices can bring short-term problems, too, as drug users turn to crime to finance their increasingly unaffordable habit.)

An enormous law enforcement effort seeks to raise prices at every point in the supply chain from farmers to end-users: Eradicating coca crops in source countries, hindering access to chemicals required for drug production, interdicting smuggling routes internationally and within our borders, street-level police actions against local dealers.

That's why this may be the most embarrassing graph in the history of drug control policy. (I’m grateful to Peter Reuter, Jonathan Caulkins, and Sarah Chandler for their willingness to share this figure from their work.) Law enforcement strategies have utterly failed to even maintain street prices of the key illicit substances. Street drug prices in the below figure fell by roughly a factor of five between 1980 and 2008. Meanwhile the number of drug offenders locked up in our jails and prisons went from fewer than 42,000 in 1980 to a peak of 562,000 in 2007.

The second embarrassment may reflect policymakers desire to ask fewer questions that bring up the first. We have remarkably little evidence that the billions of dollars spent on supply-side interdiction have much impact. There’s surprisingly little demand in the policy community to collect such evidence, despite considerable investments at every level of American government.

In 2001, the National Academy of Sciences concluded: “Neither the data systems nor the research infrastructure needed to assess the effectiveness of drug control enforcement policies now exists."  That remains true today, 12 years and hundreds of billions of dollars later.

That’s not to say enforcement has zero effect. The mere fact of a drug’s illegality massively increases its cost of production and distribution. To give one timely example, credible research suggests that the (untaxed) market price of cannabis might fall by as much as 80 percent if it could be legally produced at optimum scale as other agricultural commodities are.

But we have little reliable evidence that any particular change in the intensity of law enforcement exerts much influence on market prices. The few studies which examine this question fail to find much of a relationship between law enforcement intensity and illicit drug prices. A 2004 paper by Kuziemko and Levitt is one of the few rigorous analyses that found such a relationship. Examining a period when cocaine prices were actually plummeting, these authors estimated that a 15-fold increase in the number of incarcerated drug offenders raised street cocaine prices in the range of 5 percent to15 percent, compared with what otherwise would have been the case. That's not much.

Is there hope? I think so. Drug policy has improved during the Obama years. The president and his key drug policy advisers have largely abandoned the harsh war-on-drugs rhetoric of previous administrations. The number of incarcerated drug offenders has declined for the first time in decades. On the demand side, health reform will greatly expand access to substance abuse treatment. Drug markets are less violent than they used to be, too, which creates greater political space for less punitive policies.

I’m especially heartened that conservative groups such as “Right on Crime” are asking anew whether we really need to incarcerate so many people, for such long periods,because they participated on the supply-side of the drug economy. There is interest, across the political spectrum, in violence-reduction policing strategies, such as those promoted by David Kennedy and Mark Kleiman, that offer more discriminating approaches to police illicit drug markets.

Americans across the spectrum are finally requesting more effective, more evidence-based drug control policies. Americans also are more likely to recognize the human faces of drug users, and even of drug sellers, too. That recognition, however overdue, is the foundation of improved public policies.

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Neil Irwin · May 29, 2013