Final Report - Executive Summary

What America’s
Users Spend on
Illegal Drugs,
1988-1998
Final Report
Cambridge, MA
Lexington, MA
Hadley, MA
Bethesda, MD
Washington, DC
Chicago, IL
Cairo, Egypt
Johannesburg, South Africa
June 2, 2000
Prepared for
Office of National
Drug Control Policy
Prepared by
William Rhodes
Mary Layne
Patrick Johnston
Lynne Hozik
Executive Summary
Since 1991, the Office of National Drug Control Policy has published a biennial report on expenditures by
Americans on illegal drugs and on legal drugs used illegally. This version of that biennial report provides
estimates of cocaine, heroin and marijuana consumption from 1988 through 1998 and projects estimates for 1999
through 2000. For the first time, it provides comparable estimates for methamphetamine. This version improves
and updates estimates of the supply of cocaine to the United States, and for the first time, provides estimates of
the supply of heroin to American consumers. Finally, this version reports improved and updated estimates of
trends in the domestic price of cocaine, heroin, methamphetamine and marijuana.
We used two approaches to make these estimates. First, from a consumption-based approach, we investigated
the dollar expenditures by Americans on illicit drugs. We estimated that:
•
In 1998, Americans spent $65 billion on these drugs (Table A):1
•
•
•
•
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$39 billion on cocaine
$12 billion on heroin
$1.5 billion on methamphetamine
$11 billion on marijuana
$2.3 billion on other illegal drugs
•
Between 1988 and 1998, expenditures on cocaine appear to have fallen. This trend results
partly from a decrease in the number of users, but mostly from a decrease in cocaine’s street
price.
•
Heroin expenditures fell from 1988 to the middle of the 1990s. Heroin expenditures appear to
have increased since then.
•
Trends in methamphetamine purchases are imprecise because of significant measurement
problems. While expenditures may have fallen due to changes in the consumer price index,
consumption levels have remained about the same over the last decade.
•
Between 1989 and 1998, expenditure on marijuana increased slightly (as marijuana prices
increased) then decreased slightly (as marijuana prices fell).
•
Between 1989 and 1998, expenditures on other illicit drugs, and on legal drugs used illicitly,
remained fairly constant.
A second approach to estimating the retail sales value of illicit drugs consumed in the United States is to estimate
the amounts supplied to the domestic market. To approximate cocaine’s availability for consumption in the U.S.,
we developed three types of estimates: Cultivation Estimates, Event-Based Estimates, and the Border Allocation
Model Estimates. See Table B.
1
•
The cultivation estimates are high relative to our consumption estimates. Also, they decrease
from 588 metric tons (1996) to 406 metric tons (1998), and that trend is not reflected in other
measures of cocaine use.
•
After 1996, the event-based estimates are smaller than the consumption estimates: 204 metric
tons in 1997 and 267 metric tons in 1998. Moreover, their variability is not reflected in other
data about cocaine use.
•
The third method – the Border Allocation Model – begins with consumption estimates, so it
yields the same estimates as the consumption approach.
•
Roughly 12 to 13 metric tons of pure heroin entered the United States between 1995 and 1998.
Because heroin is roughly 80 percent pure when imported into the U.S., the 12 to 13 pure tons
represents 15 to 16 bulk tons.
•
It was not practical to develop supply-based estimates for methamphetamine and marijuana.
Consumption-based and supply-based estimates do not always agree about the amount of cocaine shipped into
the United States. According to consumption-based estimates, Americans used 291 metric tons in 1998;
according to the cultivation estimates, 406 metric tons could have entered the States in 1998. We expected
cultivation estimates to be higher than consumption estimates, however. The cultivation estimates do not fully
account for consumption outside the U.S., for unknown quantities seized by State and local authorities, and for
unknown amounts otherwise lost through the production and transshipment process. Therefore the cultivation
estimates must exceed the amount actually available for consumption.
In contrast, after 1996, the event-based estimates are lower than the consumption estimates. This relationship
was expected, because the events understate the flow of cocaine into the United States. Thus, the event-based
estimates should provide a lower limit on U.S. consumption.
Consumption-based estimates do not fully agree with supply-based estimates for heroin, but the differences are
not great. Colombia seems to produce somewhat less heroin, and Mexico seems to produce somewhat more
heroin, than can be accounted for by the consumption-based estimates. This difference might be explained by
incorrect information about processing efficiencies in Colombia and Mexico, because estimates of processing
efficiencies are based on Southwest and Southeast Asia studies.
Although these estimates are imprecise, they are sufficiently reliable to conclude that the trade in illicit substances
was somewhat less than $70 billion per year during the latter part of the 1990s, according to consumption-based
estimates (Table A).2 The costs to society from drug consumption, however, exceed the amounts spent on drug
2
abuse. Drug use fosters crime; facilitates the spread of catastrophic health problems, such as hepatitis,
endocarditis, and AIDS; and disrupts personal, familial, and legitimate economic relationships. The public bears
much of the burden of these indirect costs because it finances the criminal justice response to drug-related crime,
a public drug-treatment system, and anti-drug prevention programs.
3