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Analysis by Erowid

A number of studies have attempted to estimate the total amount of money 'lost' to society as a result of alcohol and drug abuse. These studies are often mentioned in media reports and in political discussions of how much damage 'drugs' do. The calculated costs are often used to show that more spending on 'drug prevention', police, and prisons makes economic sense.

The following is intended to give an overview of where these numbers come from and what the sorting process is behind the final values.

Two good reviews of the study process:

The costs in the common measurement of "Costs of Illness" (COI) are based on three general categories: Health Care costs, Productivity Losses, and Other Effects. Values below are from the 1992 US Study published by NIDA. This study attempts to include all direct and indirect costs to society of alcohol and licit & illicit drug use, see the notes for each table for comments on the categories.

  • Health care costs.
    These include the costs of treating alcohol and drug abuse as well as illnesses or injuries brought on by alcohol or drug abuse.

    Health Expenditures18.89.91.5

    All costs are for the U.S. in billions of dollars.

  • Productivity losses.
    These include foregone earnings during 1992 among alcohol and drug abusers who suffer from illness or are in prison or jail and among persons who are victims of crime or accidents related to alcohol or drug abuse. Productivity losses also include the foregone lifetime earnings of individuals who died prematurely in 1992.

    Premature Death31.314.61, 2
    Impaired Productivity67.714.21, 4

  • Other effects on society.
    These include nonhealth costs associated with drug and alcohol abuse, such as the costs of crime and criminal justice, social welfare, motor vehicle crashes, or fires.

    Expendatures in Criminal Justice System6.217.43
    Costs to Victims8.03.86
    Lost productivity of inmates5.417.97
    Lost "legitimate earnings" of
    drug dealers, gamblers, and prostitutes
    Social Welfare~6.1~3.1
    Motor Vehicle Crashes24.70

    Erowid Revised estimate:
    Determined by removing "lost legitimate
    earnings", "lost productivity of inmates",
    and "expendatures in Criminal Justice System"

A couple of interesting points.

"The fundamental approach in these prevalence-based studies was to determine all 'forgone alternatives' or 'opportunity costs' to the economy which resulted from illness or death in the current year caused by past and present substance abuse. Costs included all direct costs (those in which payment was made and resources used) and all indirect costs (those in which resources were lost through impaired productivity or premature mortality)."

"A central concept in market economics is "opportunity cost," and the studies reviewed employ this basic concept of cost. Opportunity cost is the dollar value of resources that are redirected away from uses to which they would have otherwise been put."

"all private costs (paid by the substance user) and all external costs (paid by others)" are included.


Includes health consequences of alcohol and drug abuse, including hospital care, physician services, specialty medical training, research, nursing home care, insurance administration, and pharmaceuticals, or "the continuum of services for certain special disease categories such as HIV/ AIDS, fetal alcohol syndrome, drug-exposed infants and 'boarder babies', hepatitis, and tuberculosis." This includes both costs accrued by individual alcohol and substance users and those by external sources.

Includes all costs for HIV/AIDS treatment and all lost productivity for premature mortality of those who contract HIV/AIDS from intravenous drug use, or through sexual contact with someone who contracted HIV/AIDS through intravenous drug use.

Based on the present discounted value of expected lifetime earnings (discounted at 6 percent) of those who die prematurely due to alcohol and drugs. Average lifetime earning estimate was $350,000 based on an estimated yearly income of $38,500. This list includes diagnoses representing abuse of and dependence on alcohol and psychoactive drugs "as well as accidental and intentional (i.e., suicide) poisoning by a broad range of drugs and medicaments - psychoactive and otherwise."

Criminal justice system expenses include police protection, adjudication, and state and federal corrections costs.

Based on estimated shortfalls in productivity and employment of substance users as well as reduction in product quality. Also includes "loss in productivity due to long-term residential treatment and short-term hospitalization"

We have found no description of what qualifies as "alcohol or drug-related crime". An important question is whether marijuana found in the system of someone convicted of a crime qualifies as "drug-related" since cannabis is detectable in the system for weeks after use. This number should only include those under the influence of alcohol or drugs when the commit a crime. Some might even argue that the study should take into consideration what percentage of the relevant population is under the influence of alcohol or drugs at any given moment rather than assuming a direct causal relationship between intoxication and crime.

Includes loss of productivity of vicitims of alcohol and drug related crime such as "[lost] work days due to injury, time for reporting crimes, inconvenience, and related reasons".

Includes loss in productivity due to incarceration for drug-related crimes (including possession and sale as well as alcohol & drug related violent crime and theft).

Based on a full-time equivalent of 600,000 drug abusers and traffickers dropping out of the "legitimate economy" in order to earn income from "predatory and/or consensual crime" (e.g., "drug trafficking, gambling, and prostitution"). Calculated at $32,000/yr income. Also includes "lost tax dollars" for untaxed incomes of drug traffickers. There is no balancing calculation included for economic benefits from drug trafficking, nor for jobs created due to alcohol and drug use such as health care workers, therapists, suppliers, and chemists.