1
Introduction

America’s problem with illegal drugs seems to be declining, and it is certainly less in the news than it was 20 years ago. Surveys have shown a decline in the number of users dependent on expensive drugs (Office of National Drug Control Policy, 2001), an aging of the population in treatment (Trunzo and Henderson, 2007), and a decline in the violence related to drug markets (Pollack et al., 2010). Still, research indicates that illegal drugs remain a concern for the majority of Americans (Caulkins and Mennefee, 2009; Gallup Poll, 2009).

There is virtually no disagreement that the trafficking in and use of cocaine, heroin, and methamphetamine continue to cause great harm to the nation, particularly to vulnerable minority communities in the major cities. In contrast, there is disagreement about marijuana use, which remains a part of adolescent development for about half of the nation’s youth. The disagreement concerns the amount, source, and nature of the harms from marijuana. Some note, for example, that most of those who use marijuana use it only occasionally and neither incur nor cause harms and that marijuana dependence is a much less serious problem than dependence on alcohol or cocaine. Others emphasize the evidence of a potential for triggering psychosis (Arseneault et al., 2004) and the strengthening evidence for a gateway effect (i.e., an opening to the use of other drugs) (Fergusson et al., 2006). The uncertainty of the causal mechanism is reflected in the fact that the gateway studies cannot disentangle the effect of the drug itself from its status as an illegal good (Babor et al., 2010).



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1 Introduction A merica’s problem with illegal drugs seems to be declining, and it is certainly less in the news than it was 20 years ago. Surveys have shown a decline in the number of users dependent on expensive drugs (Office of National Drug Control Policy, 2001), an aging of the population in treatment (Trunzo and Henderson, 2007), and a decline in the violence related to drug markets (Pollack et al., 2010). Still, research indicates that illegal drugs remain a concern for the majority of Americans (Caulkins and Mennefee, 2009; Gallup Poll, 2009). There is virtually no disagreement that the trafficking in and use of cocaine, heroin, and methamphetamine continue to cause great harm to the nation, particularly to vulnerable minority communities in the major cities. In contrast, there is disagreement about marijuana use, which remains a part of adolescent development for about half of the nation’s youth. The disagreement concerns the amount, source, and nature of the harms from marijuana. Some note, for example, that most of those who use marijuana use it only occasionally and neither incur nor cause harms and that marijuana dependence is a much less serious problem than dependence on alcohol or cocaine. Others emphasize the evidence of a potential for triggering psychosis (Arseneault et al., 2004) and the strengthening evidence for a gateway effect (i.e., an opening to the use of other drugs) (Fergusson et al., 2006). The uncertainty of the causal mecha- nism is reflected in the fact that the gateway studies cannot disentangle the effect of the drug itself from its status as an illegal good (Babor et al., 2010). 

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 UNDERSTANDING THE DEMAND FOR ILLEGAL DRUGS BACKgROUND The federal government probably spends $20 billion per year on a wide array of interventions to try to reduce drug consumption in the United States, from crop eradication in Colombia to mass media pre- vention programs aimed at preteens and their parents.1 State and local governments spend comparable amounts, mostly for law enforcement aimed at suppressing drug markets.2 Yet the available evidence, reviewed in detail in this report, shows that drugs are just as cheap and available as they have ever been. Though fewer young people are starting to use drugs than in some previous years, for each successive birth cohort that turns 21, approxi- mately half have experimented with illegal drugs. The number of people who are dependent on cocaine, heroin, and methamphetamine is prob- ably declining modestly,3 and drug-related violence has appears to have declined sharply.4 At the same time, injecting drug use is still a major vector for HIV transmission, and drug markets blight parts of many U.S. cities. The declines in drug use that have occurred in recent years are prob - ably mostly the natural working out of old epidemics. Policy measures— whether they involve prevention, treatment, or enforcement—have met with little success at the population level (see Chapter 4). Moreover, research on prevention has produced little evidence of any targeted inter- ventions that make a substantial difference in initiation to drugs when implemented on a large scale. For treatment programs, there is a large body of evidence of effectiveness and cost-effectiveness (reviewed in Babor et al., 2010), but the supply of treatment facilities is inadequate and, 1 The official estimate from the Office of National Drug Control Policy of $14.8 billion in fiscal 2009 excludes a number of major items, such as the cost of prosecuting and incarcerat - ing those arrested by federal agencies for violations of drug laws. See Carnevale (2009) for a detailed analysis of the limits of the official estimate of the federal drug budget. 2 The only estimates of drug-related expenditures by state and local governments are for 1990 and 1991 (Office of National Drug Control Policy, 1993). Given the number of people prosecuted and incarcerated each year for drug offenses, that estimate remains a plausible but unsubstantiated claim. 3 The most recent published estimates only extend through 2000 (Office of National Drug Control Policy, 2001). 4 There are no specific indices that measure drug-related violence. The assumption of re - duced violence reflects an inference from (1) the aging of the populations that are dependent on cocaine, heroin, and methamphetamine as reflected in the Treatment Episode Data Set, maintained by the Substance Abuse and Mental Health Administration of the U.S. Depart - ment of Health and Human Services; (2) the declining share of arrests of drug users that are for violent crimes, as reflected in the Surveys of Prison and Jail Inmates (Pollack et al., 2010); (3) the 70 percent decline in homicides since 1991; and (4) the increasing share of drug transactions that are conducted in nonpublic settings.

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 INTRODUCTION perversely, not enough of those who need treatment are persuaded to seek it (see Chapter 4). Efforts to raise the price of drugs through interdiction and other enforcement programs have not had the intended effects: the prices of cocaine and heroin have declined for more than 25 years, with only occasional upward blips that rarely last more than 9 months (Walsh, 2009). STUDY PROJECT AND gOALS Given the persistence of drug demand in the face of lengthy and expensive efforts to control the markets, the National Institute of Justice asked the National Research Council (NRC) to undertake a study of current research on the demand for drugs in order to help better focus national efforts to reduce that demand. In response to that request, the NRC formed the Committee on Understanding and Controlling the Demand for Illegal Drugs. The committee convened a workshop of lead- ing researchers in October 2007 and held two follow-up meetings to pre - pare this report. The statement of task for this project is as follows: An ad hoc committee will conduct a workshop-based study that will identify and describe what is known about the nature and scope of mar- kets for illegal drugs and the characteristics of drug users. The study will include exploration of research issues associated with drug demand and what is needed to learn more about what drives demand in the United States. The committee will specifically address the following issues: 1. What is known about the nature and scope of illegal drug markets and differences in various markets for popular drugs? 2. What is known about the characteristics of consumers in different markets and why the market remains robust despite the risks associ- ated with buying and selling? 3. What issues can be identified for future research? Possibilities include the respective roles of dependence, heavy use, and recreational use in fueling the market; responses that could be developed to address different types of users; the dynamics associated with the apparent failure of policy interventions to delay or inhibit the onset of illegal drug use for a large proportion of the population; and the effects of enforcement on demand reduction. Drawing on commissioned papers and presentations and discussions at a public workshop that it will plan and hold, the committee will prepare a report on the nature and operations of the illegal drug market in the United States and the research issues identified as having potential for informing policies to reduce the demand for illegal drugs. The committee drew on economic models and their supporting data, as well as other research, as one part of the evidentiary base for this

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0 UNDERSTANDING THE DEMAND FOR ILLEGAL DRUGS report. However, the context for and content of this report were informed as well by the general discussion and the presentations in the workshop. The committee was not able to fully address task 2 because research in that area is not strong enough to give an accurate description of consum - ers across different markets nor to address the questions about why mar- kets remain robust despite the risks associated with buying and selling. The discussion at the workshop underscored the point that neither the available ethnographic research nor the limited longitudinal research on drug-seeking behavior is strong enough to inform these questions related to task 2. With regard to task 3, the committee benefitted considerably from the paper by Jody Sindelar that was presented at the workshop and its discussion by workshop participants. This study was intended to complement Informing America’s Policy on Illegal Drugs: What We Don’t Know Keeps Hurting Us (National Research Council, 2001) by giving more attention to the sources of demand and assessing the potential of demand-side interventions to make a substan - tial difference to the nation’s drug problems. This report therefore refers to supply-side considerations only to the extent necessary to understand demand. The charge to the committee was extremely broad. It could have included reviewing the literature on such topics as characteristics of sub- stance users, etiology of initiation of use, etiology of dependence, drug use prevention programs, and drug treatments. Two considerations led to narrowing the focus of our work. The first was substantive. Each of the topics just noted involves a very large field of well-developed research, and each has been reviewed elsewhere. Moreover, each of these areas of inquiry is currently expanding as a result of new research initiatives 5 and new technologies (e.g., neuroimaging, genetics). The second consideration was practical: given the available resources, we could not undertake a complete review of the entire field. Thus, we decided to focus our work and this report tightly on demand models in the field of economics and to evaluate the data needs for advancing this relatively undeveloped area of investigation. That is, this area has a relatively shorter history of accumulated findings than the more clinical, biological, and epidemiological areas of drug research. Yet it is arguably better situated to inform government policy at the national level. A report on economic models and supporting data seemed to us more timely than a report on drug consumers and drug interventions. The rest of this chapter briefly lays out some concepts that provide a basis for understanding the committee’s work and the rest of the report. 5 These include the National Epidemiologic Survey on Alcohol and Related Conditions and the Community Epidemiology Work Group of the National Institute on Drug Abuse.

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 INTRODUCTION Chapter 2 presents the economic framework that seems most useful for studying the phenomenon of drug demand. It emphasizes the importance of understanding the responsiveness of demand and supply to price, which is the intermediate variable targeted by the principal government programs in the United States, namely, drug law enforcement. Chapter 3 then examines changes in the consumption of drugs and assesses the vari- ous indicators that are available to measure that consumption. Chapter 4 turns to the program type that most focuses specifically on reducing drug demand, the treatment of dependent users. It considers how well these programs work and how the treatment system might be expanded to further reduce consumption. Finally, Chapter 5 presents our recommen- dations for how the data and research base might be built to improve understanding of the demand for drugs and policies to reduce it. PROgRAM CONCEPTS A standard approach to considering drug policy is to divide programs into supply side and demand side. This approach accepts that drugs, as commodities, albeit illegal ones, are sold in markets. Supply-side pro- grams aim to reduce drug consumption by making it more expensive to purchase drugs through increasing costs to producers and distributors. Demand-side programs try to lower consumption by reducing the num - ber of people who, at a given price, seek to buy drugs; the amount that the average user wishes to consume; or the nonmonetary costs of obtaining the drugs. This approach has value, but it also raises questions. The value of this framework is that it allows systematic evaluation of programs. A successful supply-side program will raise the price of drugs, as well as reduce the quantity available, while a demand-side program will lower both the number of users and the quantity consumed, as well as eventually reducing the price. As noted above, this report is primarily focused on improving understanding of the sources of demand. There are two basic objections to this approach. First, some programs have both demand- and supply-side effects. Since many dealers are them- selves heavy users, drug treatment will reduce supply, just as incarcera- tion of drug dealers lowers demand. Second, there is a collection of pro - grams that do not attempt to reduce demand or supply; rather, their goal is to reduce the damage that drug use and drug markets cause society, which are generally referred to as “harm-reduction” programs (Iversen, 2005; National Institute on Drug Abuse, 2010).6 Nonetheless, the classifi- 6 An expanded classification to include harm-reduction programs is common in the drug control strategies of other countries, including Australia, Switzerland, and the United kingdom.

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 UNDERSTANDING THE DEMAND FOR ILLEGAL DRUGS cation of interventions into demand reduction and supply reduction is a very helpful heuristic for policy purposes, as well as being written into the legislation under which the Office of National Drug Control Policy operates. What determines the demand for drugs? Clearly, many different fac- tors play a role: cultural, economic, and social influences are all impor- tant. At the individual level, a rich set of correlates have been explored, either in large-scale cross-sectional surveys (such as the National Survey on Drug Use and Health and the National Household Survey on Drug Abuse) or in small-scale longitudinal studies (see, e.g., Wills et al., 2005). Below we briefly summarize the complex findings of those studies. Less has been done at the population level. It is known that rich western countries differ substantially in the extent of drug use, in ways that do not seem to reflect policy differences. For example, despite the relatively easy access to marijuana in the Netherlands, that nation has a prevalence rate that is in the middle of the pack for Europe, while Britain, despite what may be characterized as a pragmatic and relatively evidence- oriented drug policy, has Europe’s highest rates of cocaine and heroin addiction (European Monitoring Center for Drugs and Drug Addiction, 2007). There is only minimal empirical research that has attempted to explain those differences. Similarly, there is very little known about why epidemics of drug use occur at specific times. In the United States, for example, there is no known reason for the sudden spread of methamphet- amine from its long-term West Coast concentration to the Midwest that began in the early 1990s. There are only the most speculative conjectures as to the proximate causes. A DYNAMIC AND HETEROgENEOUS PROCESS The committee’s starting point is that drug use is a dynamic phenom- enon, both at the individual and community levels. In the United States there is a well-established progression of use of substances for individu- als, starting with alcohol or cigarettes (or both) and proceeding through marijuana (at least until recently) possibly to more dangerous and expen - sive drugs (see, e.g., Golub and Johnson, 2001). Such a progression seems to be a common feature of drug use, although the exact sequence might not apply in other countries and may change over time. For example, ciga- rettes may lose their status as a gateway drug because of new restrictions on their use.7 Recently, abuse of prescription drugs has emerged as a pos- sible gateway, with high prevalence rates reported for youth aged 18-25; 7 In Amsterdam, people can smoke marijuana at indoor cafes but not marijuana mixed with tobacco.

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 INTRODUCTION however, because of limited economic research on this phenomenon, this report’s focus is on completely illegal drugs. At the population level, there are epidemics, in which, like a fashion good, a new drug becomes popular rapidly in part because of its novelty and then, often just as rapidly, loses its appeal to those who have not tried it. For addictive substances (including marijuana but not hallucinogens, such as LSD), that leaves behind a cohort of users who experimented with the drug and then became habituated to it. An important and underappreciated element of the demand for ille- gal drugs is its variation in many dimensions. For example, the demand for marijuana may be much more responsive to price changes than the demand for heroin because fewer of those who use marijuana are drug dependent (Iversen, 2005; National Institute on Drug Abuse, 2010). Users who are employed, married, and not poor may be more likely to desist than users of the same drug who are unemployed, not part of an intact household, and poor. There may be differences in the characteristics of demand associated with when the specific drug first became available in a particular community, that is, whether it is early or late in a national drug “epidemic.” There are also unexplained long-term differences in the drug patterns in cities that are close to each other. In Washington, DC, in 1987 half of all those arrested for a criminal offense (not just for drugs) tested positive for phencyclidine, while in Baltimore, 35 miles away, the drug was almost unknown. Although the Washington rate had fallen to approximately 10 percent in 2009 (District of Columbia Pretrial Services Agency, 2009), it remains far higher than in other cities. More recently, the spread of methamphetamine has shown the same unevenness: in San Antonio only 2.3 percent of arrestees tested positive for methamphetamine in 2002; in Phoenix, the figure was 31.2 percent (National Institute of Justice, 2003). These differences had existed for more than 10 years. The implication of this heterogeneity is that programs that work for a particular drug, user type, place, or period may be much less effective under other circumstances, which substantially complicates any research task. It is hard to know how general are findings on, say, the effectiveness of a prevention program aimed at methamphetamine use by adolescents in a city where the drug has no history. Will this program also be effective for trying to prevent cocaine use among young adults in cities that have long histories of that drug? This report does not claim to provide the answers to such ambitious questions. It does intend, however, to equip policy officials and the public to understand what is known and what needs to be done to provide a more sound base for answering them.

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 UNDERSTANDING THE DEMAND FOR ILLEGAL DRUGS REFERENCES Arseneault, L., M. Cannon, J. Witten, and R. Murray. (2004). Causal association between cannabis and psychosis: Examination of the evidence. British Journal of Psychiatry, , 110-117. Babor, T., J. Caulkins, G. Edwards, D. Foxcroft, k. Humphreys, M.M. Mora, I. Obot, J. Rehm, P. Reuter, R. Room, I. Rossow, and J. Strang. (2010). Drug Policy and the Public Good. New York: Oxford University Press. Carnevale, J. (2009). Restoring the Integrity of the Office of National Drug Control Policy. Testi- mony at the hearing on the Office of National Drug Control Policy’s Fiscal Year 2010 National Drug Control Budget and the Policy Priorities of the Office of National Drug Control Policy Under the New Administration. The Domestic Policy Subcommittee of the House Committee on Oversight and Government Reform. May 19, 2009. Available: http://carnevaleassociates.com/Testimony%20of%20John%20Carnevale%20May% 2019%20-%20FINAL.pdf [accessed August 2010]. Caulkins, J., and R. Mennefee. (2009). Is objective risk all that matters when it comes to drugs? Journal of Drug Policy Analysis, (1), Art. 1. Available: http://www.bepress. com/jdpa/vol2/iss1/art1/ [accessed August 2010]. District of Columbia Pretrial Services Agency. (2009). PSA’s Electronic Reading Room—FOIA. Available: http://www.dcpsa.gov/foia/foiaERRpsa.htm [accessed May 2009]. European Monitoring Center for Drugs and Drug Addiction. (2007). 00 Annual Report: The State of the Drug Problem in Europe. Lisbon, Portugal. Available: http://www.emcdda. europa.eu/publications/annual-report/2007 [accessed May 2009]. Fergusson, D.M., J.M. Boden, and L.J. Horwood. (2006). Cannabis use and other illicit drug use: Testing the cannabis gateway hypothesis. Addiction, 6(101), 556-569. Gallup Poll. (2009). Illegal Drugs. Available: http://www.gallup.com/poll/1657/illegal- drugs.aspx [accessed April 2010]. Golub, A., and B. Johnson. (2001). Variation in youthful risks of progression from alcohol and tobacco to marijuana and to hard drugs across generations. American Journal of Public Health, (2), 225-232. Iversen, L. (2005). Long-term effects of exposure to cannabis. Current Opinion in Pharmacol- ogy, (1), 69-72. Available: http://www.safeaccessnow.org/downloads/long%20term %20cannabis%20effects.pdf [accessed July 2010]. National Institute of Justice. (2003). Preliminary Data on Drug Use & Related Matters Among Adult Arrestees & Juenile Detainees 00. Washington, DC: U.S. Department of Justice. National Institute on Drug Abuse. (2010). NIDA InfoFacts: Heroin. Available: http://www. drugabuse.gov/infofacts/heroin.html [accessed August 2010]. National Research Council. (2001). Informing America’s Policy on Illegal Drugs: What We Don’t Know Keeps Hurting Us. Committee on Data and Research for Policy on Illegal Drugs, C.F. Manski, J.V. Pepper, and C.V. Petrie (Eds.). Committee on Law and Justice and Committee on National Statistics. Commission on Behavioral and Social Sciences and Education. Washington, DC: National Academy Press. Office of National Drug Control Policy. (1993). State and Local Spending on Drug Control Actii- ties. NCJ publication no. 146138. Washington, DC: Executive Office of the President. Office of National Drug Control Policy. (2001). What America’s Users Spend on Illegal Drugs –000. W. Rhodes, M. Layne, A.-M. Bruen, P. Johnston, and L. Bechetti. Washing- ton, DC: Executive Office of the President. Pollack, H., P. Reuter., and P. Sevigny. (2010). If Drug Treatment Works So Well, Why Are So Many Drug Users in Prison? Paper presented at the meeting of the National Bureau of Economic Research on Making Crime Control Pay: Cost-Effective Alternatives to Incarceration, July, Berkeley, CA. Available: http://www.nber.org/chapters/c12098. pdf [accessed August 2010].

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 INTRODUCTION Trunzo, D., and L. Henderson. (2007). Older Adult Admissions to Substance Abuse Treatment: Findings from the Treatment Episode Data Set. Paper presented at the meeting of the Amer- ican Public Health Association, November 6, Washington, DC. Available: http://apha. confex.com/apha/135am/techprogram/paper_160959.htm [accessed August 2010]. Walsh, J. (2009). Lowering Expectations: Supply Control and the Resilient Cocaine Market. Avail- able: http://www.eluniversal.com.mx/graficos/pdf09/wolareportcocaine.pdf [ac- cessed August 2010]. Wills, T., C. Walker, and J. Resko. (2005). Longitudinal studies of drug use and abuse. In Z. Slobada (Ed.), Epidemiology of Drug Abuse (pp. 177-192). New York: Springer.

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