What America's Users Spend on Illegal Drugs 1988–1998
December 2000
What America's Users Spend on Illegal Drugs
In 1997, the Office of National Drug Control Policy (ONDCP), working with Abt Associates Inc., reported that Americans spent an estimated $57 billion to $91 billion per year between 1988 and 1995 for illicit drugs and for licit drugs used illegally. New data and a revised methodology have enabled us to improve those estimates, extend them through 1998, and project them into the year 2000.
To estimate the retail sales value of illicit drugs consumed in the United States, we examined both the demand for and the supply of drugs. The demand, or consumption approach, estimates the number of drug users, how much they spend on drugs, and the amount of drugs they consume. The supply approach estimates the volume of drugs available for consumption. To determine the amount of drugs available in this country and the retail value of these drugs, we estimated the amount of base crop raised in producer countries, and reduced it by the amounts lost, seized, or consumed in other countries and by the amount seized in the United States. We then multiplied the result by retail prices.
For a number of reasons, neither of these approaches yields precise estimates of the yearly retail value of the illegal drug trade. First, the secretive nature of drug crop production and manufacturing prevents accurate assessments of drug production. Second, with some exceptions, drug dealers and their customers transact business away from public view. Finally, drug users often misrepresent their drug use when interviewed. For these reasons, estimates of retail expenditures are based on the best available data, although those data are seldom as complete or accurate as we desire. Also, the data lack a probability-sampling basis, so we cannot provide probabilistic confidence intervals.
Because of these complexities in drug use monitoring, we encourage an evaluation of our findings in three ways. First, the reader can compare our estimates with those reported elsewhere. Second, the reader should consider whether or not the two independent approaches used in this report (supply-based and consumption-based) reach similar conclusions about the amount American drug users spend on drugs. Finally, our calculations can be replicated using alternative assumptions the reader finds more plausible than the ones we used. The report is divided into two sections. Section I reports estimates derived using the consumption approach. Section II reports estimates for cocaine and heroin derived from the supply approach, and it reconciles the differences between the two approaches. Technical material appears in appendices.
