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Informing America’s Policy on Illegal Drugs: What We Don’t Know Keeps Hurting Us
of enforcement and interdiction activities. In these studies, the increase (if any) in the price of an illegal drug following a major enforcement or interdiction action has been used to indicate the effectiveness of the action (see, for example, Yuan and Caulkins, 1998; Crane et al., 1997; DiNardo, 1993). Agencies of the federal government use price data to estimate quantities of illegal drugs consumed in the United States. Consumption is not measured directly, but estimates of expenditures on illegal drugs are available from surveys. Consumption is estimated by dividing expenditures by a price estimate (National Research Council, 1999). Caulkins and Reuter (1996) provide further discussion of the uses of price data in drug policy analysis.
The most widely used source of data on prices of illegal drugs is the System to Retrieve Information from Drug Evidence (STRIDE). STRIDE contains records of acquisitions of cocaine, heroin, and other illegal drugs by undercover agents and informants of the Drug Enforcement Administration (DEA) and the Metropolitan Police of the District of Columbia (MPDC). The data include the type of drug acquired, the amount acquired, its purity, the date of the acquisition, and the city in which the acquisition took place. If the acquisition was a purchase (as opposed to a seizure, for example), the data include the price paid. Several features of these data make them unique among drug price datasets. Specifically, the STRIDE data:
Are records of individual purchases,
Include the quantity and purity of each purchase,
Have wide geographical coverage and span a time period from the late 1970s to the present, and
Are readily available to analysts.
These features make the STRIDE data highly attractive to policy analysts who study factors that affect or are affected by the prices of illegal drugs.
Policy analyses involving drug prices often begin by using STRIDE or, occasionally, other data to construct a price index (see, for example, Abt Associates, 1999; Grossman et al., 1996; Crane et al., 1997; Chaloupka et al., 1998; Saffer and Chaloupka, 1995; Caulkins, 1994; Rhodes et al., 1994; DiNardo, 1993). The price index provides the indicator of price levels and movements in the subsequent analysis. For example, Yuan and Caulkins (1998), Crane et al. (1997), and DiNardo (1993) use movements in price indices as indicators of the effectiveness of enforcement or interdiction actions. Grossman et al. (1996), Chaloupka et al. (1998), and Saffer and Chaloupka (1995) use price indices to estimate models of the demand for illegal drugs.