The Cost Effectiveness of the War on Drugs

The goal of my paper is to determine the cost-effectiveness of current War on Drugs legislation - including current mandatory sentencing laws for drug offenders - aimed at curbing demand and supply in the market for illegal drugs. This can be accomplished by using the policy evaluation tool of cost-benefit analysis. For inputs of the analysis where reliable monetary estimates cannot be found, I will mention what information is needed and attempt to give a possible range of numbers that can be used for analysis. My paper will take a unique approach in listing the costs of War on Drugs policy for cost-benefit analysis by attempting to integrate the effects of the "crowdout effect," when drug offenders' mandatory imprisonment leads to the premature release of other prisoners. The rate of this crowdout effect has been estimated to be just over fifty percent, so this will likely have a tremendous impact on cost-benefit analysis (Kuziemko and Levitt 19). I will also pay special attention to the lost utility from drug use by those who are placed in prison for possession, among other costs to determine whether the policy is succeeding.

There are five main costs that will be utilized in my cost-benefit analysis for the War on Drugs policy: the explicit operating cost of the policy; lost utility for drug users who are arrested for possession; the crowdout effect; the costs of conducting trials for drug offenders; and the costs of keeping drug offenders in prison, both at the state and federal level.

The explicit operating cost of drug prevention by the federal government was listed as 12.6 billion dollars in 2005. Forty-five percent of this operating budget - 5.69 billion dollars - was allotted to reduce demand, with the remaining fifty-five percent - 6.95 billion - used to curb supply (Office of National Drug Control Policy 3). This per-year cost can be expected to increase annually as funding requests in recent years have been steadily rising.