Illicit Drug Use Strains U.S. Economy, Study Finds

24-01-02

The White House Office of National Drug Control Policy (ONDCP) reported January 23 that illicit drug use drained $143,000 million from the U.S. economy in 1998. As further data is calculated, losses for the year 2000 could mount to more than $160,000 million.

"Drugs are a direct threat to the economic security of the United States," said John P. Walters, ONDCP director. "Drug use results in lower productivity, more workplace accidents and higher health care costs -- all of which constrain America's economic output."

"The Economic Costs of Drug Abuse in the United States, 1992-1998" estimates the losses caused by illicit drug abuse in a variety of categories -- lost workplace productivity, medical care, law enforcement and social welfare costs. Analysis of the data accumulated over the period of the study indicates that the costs of drug abuse climbed every year by almost 6 percent. While the report does offer projections for costs in 1999 and 2000 based on available data at the time of the report, the authors say the estimates should be used with caution.

Lost productivity accounted for the greatest economic drain of any single category, according to the report. In 1998, the report cites $98,500 million in economic losses due to incarceration of otherwise productive individuals, premature death, drug abuse-related illness, hospitalization and other factors.

The study only examined the estimated costs stemming from the abuse of illicit drugs. Economic losses that may be accrued through the abuse of alcohol or legal pharmaceutical drugs are not included in this analysis.

The study is available in full here. (Need Adobe Acrobat to read)

Following is the text of the ONDCP press release about the report:

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Executive Office of the President of the United States

OFFICE OF NATIONAL DRUG CONTROL POLICY

News and Public Affairs

January 23, 2002

ILLEGAL DRUGS DRAIN $160 BILLION A YEAR FROM AMERICAN ECONOMY

DRUG CZAR DETAILS "DIRECT THREAT" TO U.S. ECONOMIC SECURITY

(Washington, D.C.)-John P. Walters, Director of National Drug Control Policy (ONDCP), today released a new study detailing the economic damage illegal drugs inflict on the American economy. The report shows that drugs sapped a staggering $143.4 billion from the U.S. economy in 1998 and projects the loss for 2000 at over $160 billion.

"Illegal drugs are a heavy drag on the American economy," said Director Walters. "This new report proves that the costs of tolerating drug use can be measured directly in dollars lost, work hours missed, and pink slips handed out."

The study, titled "The Economic Costs of Drug Abuse in the United States, 1992-1998," updates the findings of a report issued in 1998. This new study shows that the majority of these costs-$98.5 billion-are from lost productivity due to drug-related illnesses and deaths, as well as from incarcerations and work hours missed by crime victims. The study also shows that illegal drugs cost the health care industry $12.9 billion in 1998. As a result, illegal drug use strains the nation's health care resources and drives up health care costs for all Americans.

"Drugs are a direct threat to the economic security of the United States," Walters continued. "Drug use results in lower productivity, more workplace accidents, and higher health care costs-all of which constrain America's economic output. Reducing substance abuse now would have an immediate, positive impact on our economic vitality. When we talk about the toll that drugs take on our country-especially on our young people-we usually point to the human costs: lives ruined, potential extinguished, and dreams derailed. This study provides some grim accounting, putting a specific dollar figure on the economic waste that illegal drugs represent."

Among the findings in the report:

Drugs cost the U.S. economy $98.5 billion in lost earnings, $12.9 billion in health care costs, and $32.1 billion in other costs, including social welfare costs and the cost of goods and services lost to crime. Crime-related costs account for $88.9 billion, or 62 percent, of 1998's $143.4 billion total. These include goods and services lost to crime, property damage, work hours missed by crime victims and those incarcerated, and criminal justice system costs. Previously published estimates have turned out to be too low. The updated analysis reveals that drugs actually cost the economy $126.5 billion in 1995, 15 percent higher than earlier estimates. Cost projections for 1999 and 2000 are $152.7 billion and $160.8 billion, respectively.

The full study can be found on the ONDCP Web site.

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(Distributed by the Office of International Information Programs, U.S. Department of State.)