ASA: Analysis Shows Interdiction Programs Reduce Cocaine Market, Usage

ANAHEIM, Calif. Aug. 10 /PRNewswire/ Twenty years into the modern American
cocaine epidemic, data on whether interdiction efforts have affected the
price and supply on the streets of American cities have been inconclusive.
Now, in a study presented at the JOINT STATISTICAL MEETINGS, Anaheim, a
direct link between these interdiction efforts and the buyers' price of
cocaine on the street has been established.

The economic argument underlying the presumed efficacy of interdiction
programs assumes that normal supply and demand influences exist in the drug
market place. That is, a substantive reduction in the available supply of
drugs results in an increase in cocaine prices for consumers on the streets
of America. However, previous researchers have been unable to find evidence
of such effects when examining the largest available data base of cocaine
street prices, the System to Retrieve Information from Drug Evidence
(STRIDE), maintained by the Drug Enforcement Administration.

In a paper presented at the JOINT STATISTICAL MEETINGS (Anaheim Aug.
1014), A. Rex Rivolo, Ph.D., Institute of Defense Analysis, Alexandria, Va.,
stated that an analysis of the STRIDE data base, using robust, yet simple,
statistical techniques finds consistent, strong evidence supporting the
hypothesized direct link between interdiction/supply reduction efforts, and
street prices which directly affect consumption.

The STRIDE data base contains the purchase quantity, purchase price and
purity for over 40,000 undercover purchases of cocaine since 1980. While
previous analysis have shown a general trend of reduced prices since the high
prices of the early 1980s, they have yielded few insights into whether
meaningful changes in cocaine prices take place over the short term and what
the causes of these changes might be.

This lack of results from previous research is a consequence of the manner in
which cocaine prices have been analyzed. When purchased on the street, the
buyer usually purchases an adulterated product in which the amount of actual
cocaine is only a portion of the purchased volume. Since the buyer routinely
has no available means to determine the true purity of the purchase, in
practice actual buys have shown an enormous range in purity. The net result
is that the "price per gram of pure cocaine" varies greatly and in a non
normal fashion. In this market the average is not a good measure of the
typical price, since a few purchases of very low purity cocaine can cause
wide swings in these averages.

Dr. Rivolo stated that his research used techniques to reduce or eliminate
the statistical influence that widely differing purity levels might have on
the street price of cocaine, and thus was able to create price index for the
market capable of showing subtle price changes over time.

Figure 1 (see note below) depicts the resultant price index, while Figure 2
(see note below) depicts the corresponding median purity for all undercover
purchases in the STRIDE data base since 1983. Dr. Rivolo stated that he next
made an effort to relate these fluctuations to events that would logically
produce them. He found:

At times when prices were high, correlated data, such as hospital
emergency room treatments, drug testing etc., showed cocaine usage had
dropped.

Prices rose on the street and drug purity decreased during periods when
major drug interdiction programs, such as President Bush's "War on Drugs"
(1989) and the Peruvian government's shooting down of trafficker aircraft
(1995) were under way.

The insights for this analysis provide a better understanding, said Dr.
Rivolo, of the dynamics of the cocaine market and consequently allow an
improved focusing of U.S. and allied government drug control efforts.

Dr. Rivolo's paper is entitled "Seeing Your Nose in the Fog: A Statistical
Assessment of the Cocaine Market" and was presented at 3:25 p.m. on Aug. 10,
1997 in Session 16 of the JOINT STATISTICAL MEETTNGS (Anaheim Marriott, Room
Grand H).

The full program, abstracts, and author contact information are located on
ASA's Web site, www.amstat.org.

The JOINT STATISTICAL MEETINGS are sponsored by the American Statistical
Association; the International Biometric Society, ENAR and WNAR; the
Institute of Mathematical Statistics; and the Statistical Society of Canada.

NOTE: Figures 1 and 2 available via fax on demand by calling 8007530352,
ext. 714.