Part II
Data for Monitoring the Nation’s Drug Problems

Accurate description of trends and cross-sectional patterns in drug use, prices, and other relevant variables is essential to informed analysis and development of drug control policy. Theorizing and qualitative observation do not carry one very far toward the objective of assessing the effectiveness of alternative policies. Adequate data are necessary first to monitor the nation’s drug problems and then to analyze policy impacts.

In Part II, we examine the data now regularly collected by the federal government and other agencies to monitor the nation’s drug problems and consider how these data could be enhanced. Chapter 3 describes and evaluates these data. Chapter 4 examines principles for and the organization of such data collection in the federal statistical system.

The types of data discussed here are essential to inform drug control policy, but they do not suffice. Richer data aiming to shed light on specific aspects of drug use and detailed features of drug markets are needed to support research evaluating particular drug control instruments. How-



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Informing America’s Policy on Illegal Drugs: What We Don’t Know Keeps Hurting Us Part II Data for Monitoring the Nation’s Drug Problems Accurate description of trends and cross-sectional patterns in drug use, prices, and other relevant variables is essential to informed analysis and development of drug control policy. Theorizing and qualitative observation do not carry one very far toward the objective of assessing the effectiveness of alternative policies. Adequate data are necessary first to monitor the nation’s drug problems and then to analyze policy impacts. In Part II, we examine the data now regularly collected by the federal government and other agencies to monitor the nation’s drug problems and consider how these data could be enhanced. Chapter 3 describes and evaluates these data. Chapter 4 examines principles for and the organization of such data collection in the federal statistical system. The types of data discussed here are essential to inform drug control policy, but they do not suffice. Richer data aiming to shed light on specific aspects of drug use and detailed features of drug markets are needed to support research evaluating particular drug control instruments. How-

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Informing America’s Policy on Illegal Drugs: What We Don’t Know Keeps Hurting Us ever, such richer data may be collected as the need arises, rather than on the regular schedule that is basic to the monitoring function. Data needs for analysis of particular drug control instruments are discussed in Part III.1 1   The committee invited officials at a number of public agencies and private organizations to comment on the accuracy of descriptions of their programs that are discussed in the rest of this report. These agencies and organizations include: the Office of National Drug Control Policy, the National Institute on Drug Abuse, the National Institute of Justice, the Bureau of Justice Statistics, the Substance Abuse and Mental Health Services Administration, the Centers for Disease Control and Prevention, and the Institute for Defense Analyses. The committee’s written requests and the comments of those who replied to them can be found in the public access file for this study.

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Informing America’s Policy on Illegal Drugs: What We Don’t Know Keeps Hurting Us 3 Data Needs for Monitoring Drug Problems This chapter examines several types of data that are or should be regularly collected and disseminated by the federal government and other agencies to monitor the nation’s drug problems. We first describe and evaluate the main data systems providing information on drug use. We then discuss surveillance data that would be useful to provide early warnings of drug epidemics. Next we evaluate the System to Retrieve Information from Drug Evidence (STRIDE) data, the primary existing series on drug prices and purity. Finally, we discuss how aggregate statistics on drug production, consumption, and prices could be incorporated into the national macroeconomic accounts. DATA ON DRUG USE Four datasets are widely used to monitor trends and cross-sectional patterns in drug use in the United States. Two are nationwide population surveys: Monitoring the Future (MTF) surveys school students, and the National Household Survey of Drug Abuse (NHSDA) surveys the noninstitutionalized residential population age 12 and over. These surveys are based on probability samples of known populations. Hence these data can be used to draw conventional statistical inferences about the surveyed populations. The other two data systems sample events rather than persons: the Arrestee Drug Abuse Monitoring (ADAM) surveys booked arrestees, and the Drug Abuse Warning Network (DAWN) provides information on

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Informing America’s Policy on Illegal Drugs: What We Don’t Know Keeps Hurting Us drug-related episodes at emergency rooms and within the coroner’s jurisdiction. These “event-based” surveys have been used for operational purposes in the criminal justice and public health systems. They also are capable of providing evidence on emerging problems in high-risk populations. In this section we describe each of the four surveys, none of which provides information on drug consumption; we go on to recommend study of the feasibility of obtaining such information. Next we discuss issues of population coverage and sample size in the four surveys. We then investigate how nonresponse and inaccurate response may affect measurement of levels and trends in drug use. Description of the Surveys The four primary surveys used to monitor drug use in the United States collect information on whether the respondent used a wide range of illegal drugs (see Table 3.1). Specific questions are asked about alcohol, tobacco, marijuana, cocaine, hallucinogens, heroin, inhalants, and nonmedical use of psychotherapeutics. The surveys also include various levels of detail on the respondent’s demographics, health status, insurance, drug treatments, illegal activities, perceptions, and geographic location. The National Household Survey of Drug Abuse (NHSDA) is a multistage probability sample providing annual self-report estimates of the number of drug users, their pattern of use, and their characteristics. The survey covers the U.S. civilian population age 12 and older. About 2 percent of the population is not covered, including persons who are in the military, in jail, in a long-term residential treatment regimen, and those who are homeless but not in shelters. The National Commission on Marihuana and Drug Abuse conducted the first survey in 1972–1973. The National Institute on Drug Abuse (NIDA) then conducted surveys approximately every 2 to 3 years from 1973 to 1991. Since 1992, the Substance Abuse and Mental Health Service Administration (SAMHSA) has conducted the survey annually. Over the years, the sample size has been increased from 9,000 in 1988 to 26,000 in 1998 and 70,000 in 1999. The sample is now sufficiently large to enable estimation of the prevalence of illegal drug use in each of the 50 states. The sampling scheme is also stratified to ensure adequate representation by age, race, and ethnic background. The instrument includes questions about the drug use of the respondent. For each drug and for combinations of drugs, the survey elicits information on the frequency of use within the respondent’s lifetime, past year, and past 30 days. Respondents are asked the age when they were first exposed to and first used each drug, as well as when they last used it.

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Informing America’s Policy on Illegal Drugs: What We Don’t Know Keeps Hurting Us Questions are also asked about perceived risks associated with using illegal drugs, the actual health and behavioral consequences of use, and the availability of drugs. In early waves of the survey, respondents were asked to specify the amount and cost of marijuana and cocaine consumed within the past 30 days. However, these consumption and expenditure questions have not been asked since the early 1990s. Given the sensitive nature of the questions posed, substantial resources are devoted to eliciting accurate responses. The surveys are conducted by face-to-face interviews in the home or at a private location, if possible. Various steps are taken to ensure confidentiality and anonymity, but frequently this is not possible for respondents ages 12–17 (U.S. General Accounting Office, 1993).1 Monitoring the Future (MTF) is an ongoing annual study of students in public and private schools in the United States based on a sample developed using a multistage random selection procedure. It assesses the prevalence of and trends in self-reported drug use among school students. It also asks questions concerning peer norms regarding drugs, beliefs about the dangers of illegal drugs, and perceived availability of drugs (Johnston et al., 1993, 1998). Illegal drugs, alcohol, tobacco, psychoactive pharmaceuticals (non-medical use), and inhalants are included. Students who have dropped out of high school (about 15 percent of those who enter) are not surveyed. The University of Michigan’s Institute for Social Research has conducted the survey each year since 1975. The survey initially focused on high school seniors but expanded to include 8th and 10th grade students in 1991. In 2000, 13,286 12th grade students were surveyed in 134 schools. Sample sizes for students in 8th and 10th grades were 17,311 (156 schools) and 14,576 (145 schools), respectively. The MTF instrument includes questions about the drug use of student respondents. For each drug, the survey elicits information on the frequency of use within the respondent’s lifetime, past year, and past 30 1   Prior to the interview, respondents are repeatedly assured that their identities will be handled with utmost care in accordance with the federal law. During the interview, the respondent responds to sensitive questions, including those on drug use. The interviewer neither sees nor reviews the answers to those questions. After the answer sheet is complete, the respondent places them in an envelope that is then sealed and mailed, with no personal identifying information attached, to the Research Triangle Institute. Interviews are designed to be conducted in private settings, with only the interviewer and respondent present. Often, however, the interview is not completely private—especially for respondents ages 12 to 17. According the Office of Applied Statistics of the Substance Abuse and Mental Health Services Administration, at least 40 percent of the interviews with respondents in this age group are not completely private.

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Informing America’s Policy on Illegal Drugs: What We Don’t Know Keeps Hurting Us TABLE 3.1 Characteristics of Major Drug Data Collection Systems Survey/Data Collection System Sample Data Collection Sampling National Household Survey of Drug Abuse (NHSDA) 18,000 interviews per survey (calendar) year during 1994–96; 25,000 per year in 1997–98; 70,000 per year starting in 1999 Personal Interview at home using Audio-CASI Nationally representative multistage sample of the general population Monitoring the Future (MTF) Approx. 50,000 8th 10th, and 12th graders surveyed each year. In-class questionnaire and follow-up survey Nationally representative sample of students in school Arrestee Drug Abuse Monitoring (ADAM) Program Adult males and females arrested and booked during the data collection period. Generally each site collects quarterly data from 200–250 adult male arrestees, 100–150 adult female arrestees, 100–150 juvenile male arrestees (at 12 sites) and a small sample of female juvenile arrestees (at 8 sites). Personal interview and urinalysis Sample of arrests in selected booking facilities Drug Abuse Warning Network (DAWN) National representative sample of more than 600 nonfederal, short-stay emergency department visits per year. Data are also collected from approximately 146 medical examiners and coroners in 41 metropolitan areas. Medical record abstraction Probability sample of emergency department presentations; census of selected medical examiner facilities

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Informing America’s Policy on Illegal Drugs: What We Don’t Know Keeps Hurting Us Frequency of Data Collection Geographic Coverage Prevalence Estimates Purpose Throughout the calendar year National Lifetime; past 12 months; past 30 days To track use of illegal drugs and other addictive substances and to collect related information from among the general population. Throughout the calendar year with longitudinal follow-up of 12th graders once every 2 years National Lifetime, past 12 months; past 30 days To track use of illegal drugs and other addictive substances among students registered for school. Quarterly: data are collected for a two-week period, four times a year 23 cities None To track the illegal drug use among arrests. Throughout the year National None To track emergency department cases and medical examiner deaths caused by the use of illegal drugs or the abuse of prescription and over-the-counter drugs.

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Informing America’s Policy on Illegal Drugs: What We Don’t Know Keeps Hurting Us days. Respondents are asked when they first used the drug. Questions are also asked about perceived risks associated with using drugs, about the actual health, social, and behavioral consequences of use, about the availability of drugs, about the setting in which the student consumes drugs, and about expected future use. Given the sensitive nature of the questionnaire, major efforts are made to obtain valid responses and to ensure confidentiality. For 8th and 10th graders, the survey is anonymous. Seniors (12th grade) are asked to provide identifying information so that follow-up surveys can be conducted. This tracking information is administered separately from the questionnaire and kept apart from it to protect privacy. Nonetheless, the degree to which the loss of anonymity has compromised the validity of self-reports is uncertain (General Accounting Office, 1993). Beginning with the graduating class of 1976, follow-up surveys have been administered biannually by mail to representative subsamples of respondents up to age 32, and then again at age 35 and 40. The resulting panels provide the only detailed, ongoing source of longitudinal data on drug use in the United States.2 In principle, these panel data would permit researchers to address pressing questions regarding the effects of policies on drug use and the effects of drug use on behavior, as well as basic epidemiological questions regarding duration of drug use episodes. However, citing concern for the confidentiality of respondents’ identities, the Institute for Social Research has not made the MTF longitudinal data available to external researchers. The lack of access to the longitudinal data from Monitoring the Future has been a major concern among researchers, and the committee shares this concern. Without effective research access, the quality of the MTF data can not be assessed objectively, nor can judgments be made about whether to collect additional longitudinal data. While MTF cross-sectional data are made available in public-use format via the Inter-university Consortium for Political and Social Research (ICPSR) archive, the critical longitudinal data are not available to researchers outside the MTF team. These data are important for answering questions related to the continued pattern of drug use, which is key to policy decisions regarding the efficacy of alternative drug policies. These data in particular, and longitudinal data on drug consumption in general, may provide essential information for evaluating the efficacy of alternative drug policies. Two features about illegal drug control policy make longitudinal data uniquely important. First, illegal drug consumption and markets are complex and involve many confounding factors. Second, drugs are addictive; that is, 2   The National Longitudinal Survey of Youth has from time to time asked a few questions about drug use of the members of its sample, who were ages 14 to 21 in 1979.

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Informing America’s Policy on Illegal Drugs: What We Don’t Know Keeps Hurting Us consumption today influences consumption tomorrow. Longitudinal data are at least very valuable and perhaps essential to disentangle the many confounding factors and understand the addictive process. As discussed throughout this report, analysis of the dynamic process of drug use, evaluation of causal risk and protective factors, the relationship between prices, enforcement, and demand, and the effect of socioeconomic conditions on the illegal drug market all benefit from valid longitudinal data. Recently, the MTF staff announced the availability of Internet-based access to its full dataset for cross-sectional studies. These data go beyond the public-use datasets and allow for more detailed and specific analyses. However, requests to use these datasets are mediated by MTF staff, who must execute the computer programs to extract the results, review them for privacy protection, and forward them to the requesters. The committee is concerned that even this limited kind of access is not provided for the longitudinal datasets. The committee notes that the National Center for Education Statistics has developed a system for handling sensitive school-based surveys, including its longitudinal surveys. This system allows researchers and the public online access to public-use versions of these datasets. It also extends researchers access to the full datasets upon their agreement to abide by a privacy agreement. The committee emphasizes its serious concern for the lack of research access to the MTF panel data. Providing access to the underlying data, while ensuring appropriate protections for confidentiality, is an important objective of statistical policy. Wide access to datasets encourages use of the data and enlists the broad community of researchers in the task of analyzing and understanding current trends. Equally important is that external analysis provides the critical function of reviewing the data and the methods of those who gather the data and helps inform the research community and policy makers about the usefulness and limitations of the data. At the same time, it alerts policy makers to the need for improvements and the best applications of the results. In our view, it is in the public interest to have full access to all data of MTF, with appropriate protection for confidentiality. The committee recommends that the Office of National Drug Control Policy and the granting agency (currently the National Institute on Drug Abuse) establish an oversight committee of statisticians and other experts, knowledgeable in procedures for balancing the needs for public access with the goal of confidentiality, to establish guidelines for providing access and for monitoring whether access to the data is quickly and easily provided. There are a number of possible approaches that the oversight committee could recommend. One is that the National Institute on Drug Abuse undertake an agreement with the National Center for Education Statistics

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Informing America’s Policy on Illegal Drugs: What We Don’t Know Keeps Hurting Us to deposit the MTF files in its archives so that they can be made available to researchers on the same basis as other sensitive school-based surveys. Other approaches may be even more effective. In any case, the committee recommends that the granting agency require that the contractors who gather data for Monitoring the Future move immediately to provide appropriate access to the longitudinal data. Finally, the committee recommends that if access is not provided in accordance with the guidelines of the oversight committee, the Office of National Drug Control Policy and the granting agency consider whether the public interest requires relocating the grant in another organization that will provide the level of access necessary for the data to be most useful for purposes of informing public policy on illegal drugs. The Arrestee Drug Abuse Monitoring Program (ADAM) is a redesign of the Drug Use Forecasting program (DUF), which operated first in 13 sites and later in 23 sites from 1987 to 1996. As a precursor to ADAM, a history of the development of the DUF program is important. DUF was designed to capture information about illegal drug use among persons arrested and held in booking facilities (usually jails). Active criminal offenders are a population found by research to be at extremely high risk for drug use (Hser et al., 1998; Wish and Gropper, 1990). They also constitute a population of special concern because of the social harm caused by their drug use. It is well documented that offenders who use illegal drugs commit crimes at higher rates and over longer periods of time than other offenders, and that predatory offenders commit fewer crimes during periods when they use no hard drugs (Chaiken and Chaiken, 1990). The DUF program had two components which have been continued in the ADAM program. The first was a structured questionnaire administered by a trained interviewer to an arrested person who had been in a booking facility for not more than 48 hours. Second, a biological assay was included in the form of a urine specimen collected from the respondent to corroborate self-reported claims of drug use (National Institute of Justice, 1992, 1994, 1998). DUF/ADAM is the only national drug use survey that regularly utilizes drug testing. Data were collected each quarter on approximately 225 males in each site. Later, adult females and juvenile males and females were added to some but not all site samples. By 1992, as virtually the only source of continuous information on drug use within an offender population, DUF had come to be thought of as one of the major indicators of illegal drug use (U.S. General Accounting Office, 1993). The U.S. General Accounting Office found that although DUF had a variety of uses and benefits, there were serious problems associated with its sampling methods. Some of these shortcomings are remedied in the new ADAM design (National Institute of Justice, 1998; 1994; U.S. General Accounting Office, 1993). The ADAM program was implemented in 1997

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Informing America’s Policy on Illegal Drugs: What We Don’t Know Keeps Hurting Us in the 23 DUF sites and 12 new sites to improve estimates of drug use among booked arrestees. The new ADAM methodology carefully defines the population being sampled in each site (typically all arrests at the county level). A goal of ADAM, according to the National Institute of Justice, is to provide estimates that are equally precise in each site. The new methodology therefore tailors case production to such factors as site size and the rates at which booked arrestees test positive in different jails (National Institute of Justice, 1998). ADAM has also initiated a probability-based sample of arrests in each site, involving the random selection of a sample from a roster of all booked arrestees who were eligible to be interviewed during the referent data collection period. Selection intervals are based on the case flow in each site, so that interviewing is conducted when the greatest volume of arrests occurs. The new design facilitates better individual site estimates and also supports important research on within-city and city-to-city variations in the nature of drug markets and in patterns of use among arrestees. Available resources do not permit the implementation of ADAM in a representative sample of jurisdictions across the country. The Drug Abuse Warning Network (DAWN) compiles data on hospital emergency department episodes that medical staff conclude were the result of the abuse of legal and illegal drugs. The survey is administered in an ongoing national probability sample of general-purpose, nonfederal, short-stay hospitals with at least one 24-hour emergency department. The current sample design, which has been employed since 1988, is based on the survey of hospitals conducted by the American Hospital Association. The sample is updated once each year as new survey information is released. Hospitals are compensated for the time expended by the staff in preparing the DAWN records. Emergency department estimates are produced for 21 metropolitan statistical areas and for the nation. Hospitals outside these 21 areas are sampled to allow for national estimates based on a probability sample. The survey covers episodes involving persons age 6 and older who were treated in the hospital’s emergency department with a presenting problem that medical staff decide was induced by or related to the non-medical use of a legal drug or any use of an illegal drug. The DAWN report records a limited set of information about the patient and the drug use that caused the emergency department episode. DAWN classifies the motive for drug abuse as dependence, suicide attempt or gesture, or to achieve psychic effects. DAWN data elements are abstracted retrospectively from medical documentation produced during the patient’s treatment in the Emergency Department. DAWN also collects information on drug-related deaths from selected

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Informing America’s Policy on Illegal Drugs: What We Don’t Know Keeps Hurting Us 1 gm of 75 percent pure cocaine base was purchased. Therefore, the price index for an illegal drug must be inferred from prices of purchases of a range of quantities and purities. This is done by using statistical methods to estimate the relation between the mean (or median) price of the drug, the quantity and purity of the material purchased, and any other relevant variables (e.g., the calendar year or city in which the purchase was made). Abt Associates (1999), Crane et al. (1997), Caulkins (1994), Rhodes et al. (1994), and DiNardo (1993), among others, have constructed price indices for cocaine this way. An important problem in the construction of a price index for an illegal drug is that the available data may record only a small number of purchases in a given city and time period. This is the case in STRIDE, for example (see Appendix A). Therefore, analysts have typically pooled data from different cities and different forms of cocaine to obtain samples that are large enough to permit precise inference. Such pooling presents no special difficulties if the dependence of the mean (or median) price on quantity and purity (called the price function) is the same in all cities and for all commodities (e.g., for powder cocaine and cocaine base). There are, however, good reasons for expecting the price function to be different in different cities and for different forms of cocaine. Retail markets in different cities may be supplied by different distribution networks and may interact only weakly if at all. For example, a cocaine user in Washington, D.C., is unlikely to buy cocaine in Chicago or to know the price of cocaine there. Thus, the mechanisms that tend to equalize the prices of many legal products in different cities are weak in markets for illegal drugs. In addition to being influenced by different distribution networks, prices in different cities may be influenced by differences in the aggressiveness of law enforcement, income levels, and poverty rates, among other factors. Similar reasoning applies to the prices of different forms of cocaine. Converting one form to another requires skills that many cocaine users and dealers do not possess. The cost of conversion tends to separate the markets for the two forms of cocaine. Appendix A and Caulkins (1997) show that the STRIDE data produce different price functions for powder cocaine and cocaine base in the same city and that price functions that are estimated from the STRIDE data are different in different cities. When different cities and commodities have different price functions, then a price index that is estimated from pooled data can exhibit fluctuations and trends that do not exist in any of the markets whose data were pooled. In other words, the price index can exhibit fluctuations and trends that are artifacts of the pooling procedure and do not reflect true market conditions. The occurrence of such artifacts is especially likely when, as happens in STRIDE, the relative numbers of observations from different

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Informing America’s Policy on Illegal Drugs: What We Don’t Know Keeps Hurting Us cities or for different forms of cocaine vary from year to year (Appendix A). However, variations in relative numbers of observations are not the only possible source of misleading price fluctuations and trends. Variations over time in the shapes of the distributions of prices are another. The STRIDE data exhibit variations over time in the distributions of prices. Figures 3.2 and 3.3 present a simple example that illustrates this problem. In this example, the price of cocaine depends only on the quantity purchased; large quantities cost less per gram than small ones. Figure 3.2 shows hypothetical price functions in two cities. These functions give the average price of cocaine according to quantity purchased. Suppose that the price functions do not change over time. Then the price of 1 gm of cocaine is $80 in city 1 and $120 in city 2. The prices do not vary over time, so true market prices show no trends or fluctuations over time. Suppose, now, that the available data consist of the following numbers of observations of price and quantity in each of 10 years: Year Number of Observations from City 1 Number of Observations from City 2 1 20 40 2 25 35 3 30 30 4 35 30 5 20 25 6 45 30 7 50 25 8 55 35 9 50 30 10 55 40 The number of observations in city 1 tends to increase over time (possibly due to increasing aggressiveness of law enforcement), but year 5 is an exception to this trend. The number of observations in city 2 varies from year to year but shows no upward or downward trend. Assume that the purchased quantities of cocaine are in the range 0–2 gm in both cities. The purchase price of a given quantity varies randomly around the price function for the city in which the purchase is made. In this example, the range of variation is approximately ±$20.16 Suppose that a price index series is constructed by pooling the data from the two cities. In each year, the data from the two cities are combined and a price function is estimated from the combined data. The price index for that year is the price of 1 gm of cocaine according to the esti- 16   Specifically, the variation of price at a given quantity is normally distributed with a mean of zero and a standard deviation of 10.

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Informing America’s Policy on Illegal Drugs: What We Don’t Know Keeps Hurting Us FIGURE 3.2 Hypothetical price functions for two cities. The bottom line is for city 1, and the top line is for city 2. FIGURE 3.3 Price index series obtained from pooled city 1 and city 2 price data.

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Informing America’s Policy on Illegal Drugs: What We Don’t Know Keeps Hurting Us mated price function. Figure 3.3 shows the resulting price index series. The price index tends to decrease from years 1 to 8, but there is an upward fluctuation in year 5. The index increases from years 8 to 10. However, the trend and fluctuations shown in Figure 3.3 are artifacts of the pooling of the data from cities 1 and 2. The true average price of 1 gm of cocaine does not vary over time in either city. Thus, the price index obtained from the pooled data is highly misleading. Pooling has given rise to the appearance of price trends and fluctuations that do not exist in the markets in which the data were collected. Misleading results such as those illustrated in Figure 3.3 can be avoided by estimating separate price functions for each time period (e.g., year), market (e.g., city in the example), and commodity of interest. The price function for a given time period, market, and commodity is used to estimate the price of one unit of the commodity in that time period and market. A combined price index is constructed as a weighted average of the prices obtained for all commodities and markets in the given time period. If there are several different amounts or purities of interest, then the estimated price of each can be included in the weighted average. The weight assigned to a particular market and commodity is proportional to the quantity of the commodity that is sold in that market. The weights can be based on quantities sold in a base year or they can be based on yearly sales volumes. In the former case, the price index varies over time only if market prices vary. In the latter case, the price index also reflects variations in the relative sales volumes of different commodities and in different markets. The relative merits of different weighting schemes are discussed in economics textbooks and depend to some extent on the intended use of the price index. The committee does not take a position on which weighting scheme is best for drug policy analysis. To date, most of the research constructing or using prices on illegal drugs has not relied on the extensive research and practical experience on price indices that exists in the federal government and in the academic community. The committee notes that the principles underlying the construction of price indices are well established in the official national statistical community. For example, the Bureau of Labor Statistics uses standard and well-tested procedures to construct retail and wholesale price indices, taking into account regional differences, seasonal variation, and other factors. The committee recommends that a major effort be devoted to “importing” standard procedures on constructing price indices into the development of price indices for illegal drugs. This effort should take place in collaboration with federal statistical agencies that specialize in this area, particularly the Bureau of Labor Statistics. Appropriate techniques would address a number of important issues. Aggregating across

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Informing America’s Policy on Illegal Drugs: What We Don’t Know Keeps Hurting Us different prices in different regions, which was discussed above, is one issue that must be confronted. Future price indices developed from the STRIDE data should take account of differences between the prices of cocaine base and powder cocaine and the dependence of price on quantity (such as on the number of packages purchased). The use of appropriate methods would minimize spurious price movements caused, for example, by variations over time in the numbers of observations in different cities and variations in the relative numbers of observations of transactions of cocaine base and powder cocaine. Improving existing price data and developing new methods for collecting more accurate price data are among the highest priorities for improving data on illegal drugs. Until accurate price data are constructed, the nation will remain poorly informed about the trends in prices of illegal drugs, about short-run movements, about the efficacy of short-term interventions, and about the trends or levels of total expenditures on illegal drugs. Improving price data requires immediate and high-level attention from the agencies involved in producing accurate and timely information on illegal drugs. DEVELOPMENT OF A SET OF NATIONAL DRUG ACCOUNTS One of the major shortcomings of current information systems on illegal drugs is the lack of a systematic set of accounts that track the dollar flows in this sector. The current national income and product accounts focus on market transactions in the legal sector of the economy. Two major omissions are nonmarket activities (such as the value of work at home or the environment) and illegal market activities. The latter include not only production and expenditures on illegal drugs but prostitution, illegal gambling, money laundering, bribes, and smuggling. The committee recommends that consideration be given to constructing a set of satellite accounts that track the flows in sectors comprising legal and illegal drugs. This set of accounts would be called the National Drug Accounts. These satellite accounts would not enter into the current core national income and product accounts. Purpose National drug accounts would serve several purposes. First, they would help track the drug economy. They would provide information on its importance to the total economy, its size relative to the sizes of relevant sectors of the legal economy (e.g., tobacco, pharmaceuticals), and whether it is growing or shrinking. Information on total consumption and produc-

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Informing America’s Policy on Illegal Drugs: What We Don’t Know Keeps Hurting Us tion could be used to develop improved estimates of the social costs of illegal drugs. Second, national drug accounts would provide data for aggregate studies of the drug economy, or parts of it, such as the cocaine segment. For example, the study by RAND of the cost-effectiveness of alternative approaches to controlling cocaine was handicapped by the lack of reliable data on the major segments of the cocaine market (Rydell and Everinghom, 1994). A set of National Drug Accounts could provide the necessary data. Indeed, it seems unlikely that empirical economic analyses of the illegal drug industry can be carried out without moving toward a rudimentary set of national illegal accounts. Third, a set of National Drug Accounts, together with existing data and accounts on other addictive substances, could help researchers better understand a number of major policy issues in the drug market. Some examples of issues that would be aided by improved data are the substitution and complementarity patterns with other goods and services, the impact of drugs on the overall economy, and the impact on international trade flows. Finally, because such accounts would ideally include both financial flows as well as physical flows, they would help with tracking money laundering and the drug and drug-financed linkages between the United States and other countries. Elements of National Drug Accounts The structure of National Drug Accounts would be similar to that of existing accounts for the legitimate economy. The important components would be: A set of expenditure accounts, in current and constant prices, for major illegal and legal drugs. A set of production accounts for the production of each of the major sector. A set of income accounts breaking down the incomes earned in this sector into the major components (wages, profits, cost of goods sold, etc.). A set of import and export accounts that estimate the trade flows between the United States and other countries. A set of flow-of-funds accounts that track the monetary component of the “circular flow” of sales and purchases. A set of regional accounts focusing on production, expenditures, and income by state.

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Informing America’s Policy on Illegal Drugs: What We Don’t Know Keeps Hurting Us These accounts could be constructed independently as they would rely on different surveys or estimates. Although it would be ideal to have each of the six components, construction of even one or two would be helpful. Feasibility The federal government and statistical agencies in other countries currently prepare a wide variety of supplemental accounts of the kind proposed here. For example, the U.S. Bureau of Economic Analysis, which is responsible for constructing the National Income and Product Accounts, has prepared environmental and natural resource accounts, accounts for research and development, transportation satellite accounts, and prototype accounts for unpaid household work. While the committee has not investigated the practices in other countries, there have apparently been attempts to build a set of drug accounts for Colombia and some consideration of integrating accounts for drugs has been given in The Netherlands. The accounts could be readily constructed for legal drugs. Moreover, there are rough estimates of many of the components for illegal drugs. However, it must be emphasized that constructing a full and accurate set of accounts would be difficult because of the problems with obtaining the data on many prices and quantities. There is likely to be strong synergy between the data needed to construct the National Drug Accounts and the data needs discussed elsewhere in this report (see particularly the discussion of the utility of better data on prices and on total consumption). One of the advantages of using the methodology of the National Income and Product Accounts is that uncertainties are retained as statistical discrepancies rather than being swept under the rug. REFERENCES Abt Associates 1999 The Price of Illicit Drugs: 1981 through the Second Quarter of 1998. Report prepared for the Office of National Drug Control Policy. Anglin, M.D., J.P.Caulkins, and Y.I.Hser 1993 Prevalence estimation: Policy needs, current status, and future potential. Journal of Drug Issues 345–361. Anthony, J.C., and M.Van Etten 1999 Epidemiology and its rubrics. In Comprehensive Clinical Psychology, Bellack and Hersen, eds. Amsterdam: Pergamon. Bachman, J.G., P.Freedman-Doan, and P.M.O’Malley 1999 Changing patterns of drug use among U.S. military recruits before and after enlistment. American Journal of Public Health 89:672–677.

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