The Economic Costs of Drug Addiction: A Never-Ending Cycle

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Abstract

This research paper discussed the economic losses associated with drug abuse and drug addiction. The background information described the study of economic loss associated with drug addiction, and a comparison of the economic losses associated with drug addiction compared to other types of diseases. The increased costs to individual healthcare and the increased costs to the healthcare system was explained. The increase in crime and the associated economic impact was defined. The cost to national productivity was explained. The problematic pattern of government spending was described. Possible solutions were offered followed by the conclusion and recommendations. These facets demonstrated that the financial consequences of drug addiction are significant, but also the way the problem is addressed, from a reactive rather than a proactive stance, perpetuates the cycle of drug abuse and addiction.

Introduction

The costs of drug addiction take a toll on every aspect of life. To an individual, it takes an emotional, physical, and mental toll. It takes a toll on the family unit. It places extra burdens upon society. One of the burdens that has been well established is the economic costs of drug abuse on society and behavior. This paper will address the economic costs of drug addiction. The background information will describe the study of economic loss associated with drug addiction, and a comparison of the economic losses associated with drug addiction compared to other types of diseases. The increased costs to individual healthcare and the increased costs to the healthcare system will be explained. The increase in crime and the associated economic impact will be defined. The costs to national productivity will be explained. The problematic pattern of government spending will be described. Possible solutions will be offered followed by the conclusion and recommendations. These facets will demonstrate that the financial consequences of drug addiction are significant, but also the way the problem is addressed, from a reactive rather than a proactive stance, perpetuates the cycle of drug abuse and addiction.

Rather than rehash names and descriptions of the different types of drugs and drug addictions, the following section will address the financial consequences our nation experiences as a direct result of drug addiction.

The Study of Economic Loss Caused by Drug Addiction

In 1984, the United States Department of Justice conducted the first study of its kind – assessing the societal consequences of drug addiction and abuse in terms of economic impact and loss (Simeone & Maggio, 2011). It increased awareness that drug abuse was not just a matter of personal preference or lifestyle, or that a person was only harming him or herself and not other people. The effects of drug addiction and abuse can be measured in terms of dollars, and the costs are damaging and significant. The report broke down these realized dollars in terms of three areas: healthcare, crime, and overall national economic loss. The report was updated in the late 1990s, and again in 2011, following the same model and procedures of the original report.

In 2009, the National Center on Addiction and Substance Abuse at Columbia University released their report of the economic loss realized from drug addiction. They expounded upon the Department of Justice’s information, including dollars spent on local, state, and federal levels rather than just federal spending. Also, the report highlighted the problematic pattern of government spending on drug addiction. Rather than putting more of the nation’s dollars into prevention, which has demonstrated a positive effect in the prevention of tobacco smoking, the government spends relatively little for preventative measures and almost all of its dollar upon cleaning up after the problem, encouraging a culture of acceptance of the problem rather than a culture of prevention of the problem, which will be elaborated upon in the section following the three areas of economic loss.

Comparative Data: How Big Is the Problem?

Drug addiction is one of the largest problems this nation must address and is comparable to the treatment of other diseases. As Simeone and Maggio (2011) cited, diabetes, obesity, smoking, and heart disease were studied in 2008 in terms of direct health care and other economic costs of the disease similar to the study conducted on the economic costs of drug addiction, including direct health care costs and the costs associated with disability. The findings of the study indicate a $174 billion dollar cost. The total costs for obesity, smoking, and heart disease were $147 billion, $157 billion, and $316 billion respectively. The total costs for drug addiction were just over $193 billion dollars. The following section will provide a breakdown of the costs associated with drug addiction.

Description of Economic Losses Associated with Drug Addiction

Simeone and Maggio (2011) described their method for gathering the totals for their study. They used reports from other governmental and organizations that are in the business of healthcare to arrive to their totals. Also, explained Simeone and Maggio (2011), in some cases, to arrive to totals, they attributed some of the costs to being related to drug addiction, but they could not say for certain that in each case it was clear for the contribution drug addiction played in the situation. For instance, if a person was drunk or high when arrested, they could not say for certain that the drugs or alcohol was the direct cause of the arrest, unless they were stealing to support their habit, or if they went into a drug-induced frenzy that was the direct cause of a murder. In the case of illness, drugs may not be the entire reason a person contract HIV. However, because drugs were involved in those incidences, they were included as part of their study, but they calculated the totals with a margin of error.

Also noteworthy, Simeone and Maggio’s (2011) study reflects the total costs of illegal drug use only. The calculations and estimates are probably much higher if one includes the abuse of legal substances, such as alcohol, tobacco, and prescription drugs. The totals associated with illegal drug use are reported in the following sections.

Healthcare Costs

Simeone and Maggio (2011) cited the totals to healthcare costs. The first category is in the direct treatment of drug addiction, including inpatient ($1,223,800,000) and outpatient (1,028,994,000) drug clinics, methadone clinics (650,557,000), and detox programs ($465,213,000), which tally to 3,368,564,000.

Also part of the costs to healthcare was the treatment of United States veterans. The totals for veterans treated for drug addiction, according to Simeone and Maggio (2011) was $347,504,000, which was obtained from the United States Department of Veteran Affairs. Reports from other agencies included the DOD and the ONDCP, spending $7,825,000 in their expenses due to the treatment of drug addiction amongst their ranks. Total for the treatment for drug addiction for the nation was $3,723,338,000.

Simeone and Maggio (2011) stated emergency room care and hospital costs associated with the care of illnesses often found in people who abuse drugs were as follows. For drug use, hepatitis B. hepatitis C, HIV, tuberculosis, and other types of illnesses totaled $5,523,189,000. For emergency care of drug use, HIV, and other types of illnesses, the total was $161,059,000, for a grand total of $5,684,248,000.

In the treatment for homicides as a direct result of drug involvement or where drugs were present and thought to be a factor in the murder or attempted murder, the costs to hospitals was $12,700,000, and urgent care costs were $238,000, for a total of $12,938,000 Simeone and Maggio (2011) observed. Numbers are thought to be so low for emergency care because of the fact that many victims that have an attempt on their life do not make it to the hospital for treatment.

Other healthcare costs associated with drug addiction are insurance costs, estimated at 6% of all healthcare transactions, were $544,000, Simeone and Maggio (2011) stated. The government also funds preventative programs. The total for prevention programs for illegal drugs was $1,373,101,000.

Crime Costs

As Simeone and Maggio (2011) expressed, the same procedure for attributing some crimes where causation was not 100% clear, such as stealing to support a drug habit, or getting arrested for the sale of drugs, was necessary for the total amount to be derived for crimes related to and directly attributable to drugs. The causative factor is unknown for some cases, but because there was an involvement of drugs (a person battered another person while under the influence of drugs, for example), drugs are said to play a part in the crime while the causative effect is unknown or implied. If the person was not under the influence of the drugs, it is unclear whether or not the crime would have occurred. However, when the statistics are adjusted for a margin of error, obtaining figures is possible.

Simeone and Maggio’s (2011) method for attribution was described in their study. They took the local, state, and federal numbers for incarceration. This included numbers for running the police departments for state and local levels, the FBI on the federal level, the judicial process, incarceration, parole supervision, and other costs associated with law enforcement activities. The culminated total for law enforcement were $56,373,245,000.Accumulated medical costs associated with crimes related to drug addiction and crimes that are directly associated with drug addiction, stated Simeone and Maggio (2011). The total for these types of crimes is $216,522,000.Property loss is another factor in calculating economic loss. For crimes with a high degree of violence and crimes where loss of personal property was realized, the totals were $834,140,000 and $576,746,000.

As Maggio and Simeone (2011) observed, sometimes it is necessary to account for not only the costs of the crime itself, but also for the resulting consequences in the aftermath of the crime. For instance, a victim of a crime might accumulate medical bills and loss of productivity. Those factors are accounted for in this section. For victims of crimes where medical attention was necessary, the total amount for medical bills, property damage, and loss in productivity were was $1,455,555,000.

In the funds to fight the war on illegal drugs, one can observe how funds are appropriated within the federal government. The Department of Defense spends $1,188,325,000, including intelligence activities, the coordination of state and local authorities, and other activities associated with the prohibition and prevention of illegal drugs from entering the country. The Department of State, which include its funding for the anti-drug activities of the Bureau of International Narcotics, Law Enforcement Affairs, and the United States Agency for International Development has a budget of $1,010,581,000. The United States Coast Guard, part of Homeland Security, has easily identifiable totals for its spending in fighting drug activity - $1,080,916,000. The Office of the National Drug Control Policy appropriates funds to local, state, and federal agencies, and its total is $218,430,000. Other expenses for this agency (Counternarcotics Technology Assessment Center, Special Funds, and Operations) total to $3,547,885,000. The next section will describe the figures for loss of national revenue attributed to drug addiction.

Productivity and Revenue

Simeone and Maggio (2011) expressed loss of productivity as a person not being able to work, regardless if the person is doing jail time for a crime, or if a person is in a drug treatment program, or if there is an early loss of life due to accidental overdose or as a murder victim. In other words, a loss of productivity occurs as a direct result of any of the causes listed in the healthcare and crime sections of this paper that would prevent a person from working on a short-term or long-term basis. The losses due to treatments for drug addiction that require a hospital stay, jail time, or one’s life cut short due to factors such as a crime, overdose, or illnesses usually contracted during the course of addiction, total to $49,237,777.

As Simeone and Maggio (2011) reiterated, some costs are clearly identifiable and can be taken as is, such as drug overdoses, while others need adjustment because the causative effect of the drugs’ role in loss to productivity is not clearly identifiable, while if it is present as a factor, does play some role in the causation of the condition. This explanation is consistent with the two previous sections in this paper. However, Simeone and Maggio noted that for calculating productivity, one must look at the cumulative effect of these factors. For instance, one would not calculate the loss of life for people that have died within the same year as the study. The loss of life must be calculated from a retrospective viewpoint, where the loss of lives due to drugs for years prior are accounted for in current calculations, thereby having a cumulative effect from the time of death to the current year.

Different Statistical Approaches Yield Different Totals

As expressed previously in this paper, the description of the costs associated with illegal drugs carried a weighty total. However, Simeone and Maggio’s (2011) study does not cover other possible costs of government spending towards drug abuse. Yet, the framework for cost estimation of economic losses due to drug addiction and abuse are often the same. The losses to healthcare and losses due to criminal activity are the standard in reporting economic loss associated with drug addiction.

Other agencies offer different dimensions in economic losses associated with drug addiction. As the National Center on Addiction and Substance Abuse at Columbia University (2009) described, people are also addicted to legal substances that have a high cost to society. Alcohol has different health related costs, such as liver transplants, which might not necessarily occur with other types of addictions. Cigarettes also add to the dimension of health costs because it is most often associated with a host of cancers, which don’t occur as often as with illegal substances. The National Center on Addiction and Substance Abuse at Columbia University (2011) estimates total costs to healthcare and criminal costs to be approximately $250 billion with the inclusion of legal substances.

Prescription drugs are another concern, and carries with them different challenges, which adds to the overall numbers for health and incarceration related costs. For instance, the amount of personal and pharmacy thefts of legal pain killers and “smart” drugs such as Ritalin are on the rise, and so is use and addiction to these substances, especially amongst teenagers and college students, which are estimated to total $181 billion for costs to healthcare and crime (American College of Preventative Medicine, 2011). If this figure is true, then the costs for all addictive substances, legal and illegal, are much higher. Moreover, as The National Center on Addiction and Substance Abuse at Columbia University (2009) pointed out, statistics are not available on every conceivable dimension of drug addiction and abuse costs, such as civil court cases where drugs were involved, which could bring the economic costs even higher if it were ever measured. As it is, the National Center on Addiction and Substance Abuse at Columbia University (2009) estimates the cycle of drug addiction for all levels of government (local, state, and federal) to be close to $468 billion. This number is thought to be more of a realistic estimate of the economic costs of all drug addictions (Friends of NIDA, 2008).

Discussion and Recommendations

The National Center on Addiction and Substance Abuse at Columbia University (2009) described the problem of government spending in the aftermath of drug addiction. They depicted a problematic pattern of spending that is reactive instead of proactive. Out of what was spent, increase in healthcare, crime, and productivity loss accounted for a majority of the budget, while only 1.9% was allocated for prevention programs, perpetuating the cycle of drug abuse. The report cited that the amount of education aimed at the problem of smoking was effective. Attention towards alcohol and illegal drug abuse should receive more funding to reduce drug addiction of all types.

Recommendations and Conclusions

As the Friends of NIDA (2008) stated, the right prevention programs and evidence-based treatment programs do work. If more funding were allocated towards prevention, for every dollar spent, the government would save between 4 and 7 dollars in healthcare costs and criminal costs. More research is needed for the treatment of drug addiction. As Friends of NIDA (2008) depicted, more research is needed to understand the cycle of addiction from a multifaceted approach, taking into account all factors of a person, from biological, to psychological, to physiological.

Moreover, there is a significant lack of research regarding expenditures in treating different populations and types of addictions. For instance, in researching this paper, it was apparent there are significant gaps in the literature regarding the economic costs associated with different populations, such as teenagers, and the different types of addictions, such as prescription drugs. More data is needed to pool together the knowledge to understand how and where our nation’s dollars are being spent. In this way, money can be spent for cost effective strategies rather than the opposite. As the National Center on Addiction and Substance Abuse at Columbia University (2011) stated, the likelihood of addiction decreases if children, teens, and young adults can abstain from trying addictive substances before the age of 21.

Therefore, it is apparent from this research paper that the cycle of drug addiction has an enormous financial drain on this nation. As the National Center on Addiction and Substance Abuse at Columbia University (2011) pointed out, our culture of acceptance needs to change. As a nation, the focus must become one of prevention.

References

American College of Preventative Medicine. (2011). Use, abuse, misuse, and disposal of prescription pain medication: Clinical reference. Retrieved from http://www.acpm.org/?UseAbuseRxClinRef

Friends of the National Institute of Drug Abuse (Friends of NIDA). (2008). Addiction research: A national imperative. Retrieved from http://www.cpdd.vcu.edu/Pages/Index/Index_PDFs/TransitionPaperOctober20081.pdfb

National Center on Addiction and Substance Abuse at Columbia University. (2011). Fast Facts. Retrieved from http://www.casacolumbia.org/templates/NewsRoom.aspx?articleid=617

National Center on Addiction and Substance Abuse at Columbia University. (2009). Shoveling up II: The impact of substance abuse on federal, state, and local budgets. New York, NY: Author.

Simeone, R. & Maggio, M. (2011). The economic impact of illicit drug use on society. Washington, D. C.: United States Department of Justice. Retrieved from www.justice.gov/archive/ndic/pubs44/44731/44731p.pdf