Social harm and drugs: Is something missing?

In a recent article on Cannabis seizures the police said:

Based on the New Zealand Drug Harm Index, it was estimated that $379 million worth of social harm had been prevented by the operation

So I looked up the drug harm index and found a release from BERL that stated:

Cannabis is estimated to cause harm of $11,800 per kilogram

Now, I’m confused here.  By social harm do we mean that this is the externality associated with a kg of weed?  If so that is huge and I am not sure where that is coming from.

If that is the total cost associated with weed it is largely policy irrelevant as (depending on market segmentation), I suspect, that this would mainly be the size of the private cost of buying weed.  Given that the transaction is voluntary as, I guess people must get some satisfaction from it when they consume it, this cost must provide a lower bound to the size of the satisfaction associated with the consumption.

In this case the police should say “we prevented $379m of pain AND $400m of pleasure” – when it is put this way it doesn’t sound quite as flashy 😉

24 replies
  1. Paul Walker
    Paul Walker says:

    I wonder if they net out the cost of the police operation, the cost of the court system, the cost of prisons etc. I’m guessing not, which as you says makes the figure largely policy irrelevant.

  2. Keith Ng
    Keith Ng says:

    For every kilogram of pot you buy, the pot dealer than takes the money and buys E, then the E dealer takes the money and buys P, then the P dealer goes and blow it all on alcohol, gets drunk, have unprotected sex and have little P dealer babies with uzis.

    That’s what happens when you smoke pot, little Johnny.

  3. Eric Crampton
    Eric Crampton says:

    Come on. You know better than to think any report produced by BERL will have done anything useful like, for example, separating external from internal costs. Or separating the costs of enforcing a prohibition regime from other costs of drug use.

    BERL says by definition marijuana has no benefits because it is illegal.

    Amazing that folks choose to toke up then isn’t it.

    Another shonky report by a shonky outfit.

  4. Matt Nolan
    Matt Nolan says:

    @Eric Crampton

    I haven’t seen the BERL report here as it isn’t available. I’m sure they produced exactly what they were supposed to produce.

    My critique was of the use of the figure by the police – if BERL did make an estimate of total cost the police shouldn’t use it in this way methinks.

  5. Eric Crampton
    Eric Crampton says:

    I’m also sure that they produced exactly what they were supposed to produce. I suspect that we would pronounce that sentence with different intonations.

  6. Mel Gibson
    Mel Gibson says:

    If more than a quarter of people of voting age are toking or have toked up, then that’s a fairly sizable percentage, it’s more than the greens ever get voted in.
    It should never have been illegal in the first place.

  7. Eric Crampton
    Eric Crampton says:

    Oh, their report is here. If you have time to check it out. A quick scan suggests exactly the same problems as with their shonky report on alcohol, though, so weighing in on it would effectively be taking a position on the alcohol paper.

    Critiquing its use by the police is particularly fun given that the thing was commissioned by the police. They got exactly the report they wanted and they’re currently using it for the exact purpose for which it was commissioned: agitprop with a sciency flavor.

  8. Eric Crampton
    Eric Crampton says:

    From their report:

    The study focuses on social costs, that is costs borne by the individual or wider society for which there is no corresponding benefit. While there are arguments as to the legitimacy of, and value to be placed on, the private benefits of illicit drug consumption (see Collins and Lapsley (2002: 17:19), this study does not attempt to explicitly value net private benefits. Consistent with New Zealand public policy, and the argument set out in Collins and Lapsley (2002: 20-21), this study assumes that illicit drug consumption is abusive and imposes a social cost. Therefore, all resources diverted by illicit drug consumption are regarded as social costs.
    The study aimed to estimate net social costs, rather than gross social costs of drug use. That is, drug use may offset some costs as users reduce the burden on society’s scarce resources. For example, premature death reduces the health care that users might otherwise have required if they had lived longer.

    So exact same thing as the later alcohol report. “Social costs” include internal costs where there are no corresponding benefits, but we’ll define benefits to be equal to zero to make things easier. Then we’ll keep calling it social costs or net costs to make it sound like it’s a proper welfare measure.

  9. steve
    steve says:

    @Keith Ng
    I suppose you could consider that, but you would also have to do an input output analysis for marijuana use to cover the additional economic activity due to the dealer using profits to spend on other drugs like E and P. But I doubt appropriate multipliers are avaliable in this case. Though if the analysis were possible, its possible that again the economic “benefit”, would outweigh the costs you describe. Its just a question of how big you want to make the circle around the economic activity you are assessing. if you increase the circle for all the costs, you must also increase the circle for all the benefits to make a fair comparison.

  10. ben
    ben says:

    It is a measure of the corruption in the bureaucracy that a company like BERL can be paid so much to assume their answer and then have their entirely bogus estimate quoted as authoritative.

    I’ll speculate that BERL’s report implies negative productivity. Not only is the time and effort of its authors diverted to an enterprise of zero (gross) worth, the time and effort of many others is also uselessly diverted when reading it. Not producing BERL’s report would not only freed its authors to do something useful, nobody would have to waste their time reading their rubbish.

    Call it the BERL Multiplier: the ratio of the total value of time wasted on reading a BERL report to the value of time wasted writing it. How does 1.87 sound?

  11. Dave
    Dave says:

    90% of the “harm” figure for cannabis (table 6.2) comes from the full cost of production, as handwaved up by taking a percentage of the street price, because it could otherwise have been used to produce something “useful”, and the cost of the associated criminal activity and prosecutions, because it is illegal. Sigh.

  12. Tongan Ninja
    Tongan Ninja says:

    I find it hard to belive that any harm can be associated with Marijuana. The only way I can see them being able to say they saved New Zealand from X amount of $ in social harm is the cost of the time of the enforcement, surveilance, court costs and imprisonment costs. All these people don’t work for free. I have been recommending a DVD to everyone I know. It’s called “The Union: The Business Behind Getting High.” Please watch and learn.

  13. Wine of Month Club
    Wine of Month Club says:

    Harm as in harm to the economy because so many less bags of potato chips were purchased? It’s a strange metric especially because it isn’t explained at all….yes the cops need to stop the flow of drugs but let’s be realistic about the costs on both sides!

  14. Kimble
    Kimble says:

    I think there IS a social cost of dope, the fact that it drains motivation from young people and destines them to a life on the dole (I grew up in West Auckland) means that others have to support them through the benefit system.

    I struggle to come up with enough ideas for social benefits to offset that.

    Of course I accept that it is possible that the nohoperism and loserdom came before the dope smoking. But I have amassed enough anecdotal evidence to suggest that otherwise intelligent, motivated young people can be made complacent with their lives very early in adulthood and live to regret it not very long after. They try to catch up, but its hard and the other option is easier.

    Anyway, WTF is BERL going on about with premature death in relation to dope? Heroin yes, P yes, but marijuana? Are they serious?

  15. newsupermusic - richard niki fuchs
    newsupermusic - richard niki fuchs says:

    the problem? people are talking about drugs – however never about the underlying reasons and problems, why people are using drugs/drinking a lot of alcohol… just for example? i know a man, his brother died in a dreadful accident, his father died by suicide and and and… what´s now? he is drinking a lot of alcohol… not any wonder… or another case: i know a 27 old young man who has been one of the best soccer players in his country at the age of 17 years old (not in new zealand – in another country) and then he had an accident – so he had to stop playing soccer – he is a morphium junkie now… i asked him why… he just said – he wish to be happy and he just wish to have a happy feeling… or michael jackson – who died not long ago – see comment on one of my websites – http://www.newsupermusic/newsupermusic and as long – as the underlying problems not get solved or it is not possible to solve the underlying problems – which are leading to the problem, that people are using drugs or alcoholics, all those discussions are very superficial nearly all the time and not leading to any positive results in my opinion! what i wish to say is, people wish to be happy and if they have problems or if they are not happy, then many people are beginning, to use drugs or to drink alcohol, to be happy/more happy or to forget their problems! and a discussion without all those aspects is a total nonsense in my opinion, most of the time – in my opinion – leading “to nothing”… newsupermusic – richard niki fuchs, herbststrasse 71-75/12/2, at-1160 wien, austria, europe.

  16. Aburijal
    Aburijal says:

    Drugs is affecting the youth, the biggest reason of drugs being used by the youth is the poorness they live in and for others the lack of supervising

  17. MikeE
    MikeE says:

    @Paul Walker
    Yeah, those are teh cost of drug harm, they are the costs of prohibition harm, which are different.

    And again, they don’t measure the benifits of drugs, i.e. fun, getting laid, funding the property industry, etc.

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