Why we need a cost-benefit analysis

A testimony published by RAND CORP earlier this year reflects what Transform has long been calling for – a cost-benefit analysis of all the policy options for the control of drugs.

‘What Research Tells Us About the Reasonableness of the Current Priorities of National Drug Control’

The testimony was given by Rosalie Liccardo Pacula a senior economist at RAND CORP’s Drug Policy Research Centre to the Committee on Oversight and Government Reform Subcommittee on Domestic Policy United States House of Representatives.
She goes straight to the point arguing that,

‘The current mix of enforcement, prevention and treatment strategies is not the optimal for managing the drug situation we have today. But the problem is not just one of balance in the budget, which implies that simply re-allocating monies across the three primary objectives would fix the problem. The problem is also one of waste. In several areas, the 2008 National Drug Control Strategy advocates continuing or new support for programs that have either (a) never been scientifically proven to be effective and which on analytic grounds seem unlikely to be successful or (b) have already been shown to be completely ineffective.’

This line of argument is backed up not only by Transform (see What is the true cost of drug law enforcement? Why we need an audit for one example) but also by another economist in Informing America's Policy on Illegal Drugs: What We Don't Know Keeps Hurting Us.

"It is unconscionable for this country to continue to carry out a public policy of this magnitude and cost without any way of knowing whether, and to what extent, it is having the desired result. Our committee strongly recommends that a substantial, new, and robust research effort be undertaken to examine the various aspects of drug control, so that decision-making on these issues can be better supported by more factual and realistic evidence."

Many economists, and indeed The Economist (see here for example) and the FT (here) amongst others have been calling for, at the very least, a rational evidence-based evaluation of the true costs of the war on drugs.

Even the Government’s drugs spokesman in the House of Lords, Lord Bassam of Brighton, discussed the relevance of a cost-benefit analysis in looking at the full range of policy options in October last year, although he also rules it out.

‘…we believe that our policy is not only right but evidence-based [sic] and that we are making progress.... It is for that reason that we have begun to set out our strategy and decided to consult further on the way in which that strategy should be perfected [sic].

To make our position plain—it is worth putting this on the record—we do not accept that legalisation and regulation are now, or will be, an acceptable response to the presence of drugs [how can they know if they haven't conducted a CBA]. As I said earlier, my right honourable friend the Prime Minister reinforced that view at the recent Labour Party conference when he said that,

“drugs are never going to be decriminalised”.

Legalisation is not open to us in view of our international obligations… The current policy of prohibition on drugs is international and is governed by UN conventions that make unlawful the production and supply of many harmful drugs and limit possession exclusively to medical and scientific purposes. It would be wrong for us to lose sight of that perspective. There is no effective cost-benefit analysis of such a policy, if one could be made. Any such policy would need to address the international dimension.

The impact of legalisation on levels of consumption globally is key to any meaningful cost-benefit analysis. Without accurate figures for this, it is impossible to ascribe meaningful figures to the likely public and individual health cost or properly to assess the impact on productivity and industry or on the level of industrial or traffic accidents. Such fundamental difficulties call into question whether the task is an appropriate use of research funding. The impact of drugs on health is the only legitimate reason for control…

The Government, like the international community generally, believe that the prohibition of narcotic and psychoactive drugs is a crucial element in keeping the level of drug use under control. Such drugs would become easier to access if they were to become legally available, and we would expect levels of use and the resultant harm and costs to individuals and society to expand significantly in the way in which alcohol and tobacco use has done... We acknowledge that there are apparent benefits to an alternative system to prohibition, such as taxation, quality control and a reduction on the pressures on the criminal justice system, but in our view these are outweighed by the costs to the physical and mental health of individuals and society that result from dependence on, and addiction to, what are mind-altering drugs. Legalisation would not safeguard these very real public health interests or allay the concerns; nor would it necessarily significantly undermine international organised crime. For this reason, the Government will not pursue legalisation either domestically or internationally. It is all too easy to lay the problems of the use and misuse of drugs here and abroad simply at the door of prohibition.’

Transform once asked the then drugs minister Bob Ainsworth MP whether he would commission an audit of the effectiveness of drug enforcement spending, to which he tellingly replied:

“Why would we want to do that unless we were going to legalise drugs?”

Finally, I’m going to leave it to Daniel Craig in the opening monologue of the gangster movie Layer Cake to explain who really benefits from the present system of prohibition and who will lose out when they are legally regulated again (first two minutes).