If anyone needs an example of the mis-use of cost-benefits analysis...Of course, if something this sloppy and shoddy had been done to justify (for example) increased environmental regulation, it would have been laughed at and dismissed by NBER economist types.
This reminds me for three unrelated OP-EDS in the Washington Post yesterday. The columnists, ranging from Novak to Kuttner have just discovered, to their chagrin, that the Bush Administration is "Pro-business, not pro-market". It seems at NBER if you are pro-big corporation, pro-military, pro-prison industy, pro-national security state, anything goes. At least the last paragraph of this abstract basically acknowledges that the whole thing is a sham. 2) FAVORABLE EFFECTS OF IMPRISONING DRUG OFFENDERS "Annual expenditures of approximately $10 billion on drug incarceration almost pay for themselves through reductions in health care costs and lost productivity attributable to illegal drug use, even ignoring any crime reductions associated with such incarceration." The number of Americans incarcerated on drug-related offenses rose 15-fold between 1980 and 2000, to its current level of 400,000. Despite this enormous increase, there has been no systematic, empirical analysis until now of the implications of the new, tougher drug laws for public safety, drug markets, and public policy. In "An Empirical Analysis of Imprisoning Drug Offenders" (http://papers.nber.org/papers/W8489), authors Ilyana Kuziemko and Steven Levitt find that the increase in the prison population on drug-related offenses led to reductions in time served for other crimes, especially for less serious offenses. This phenomenon is primarily attributable to the limited space available at penal institutions. However, despite this reduction in time served, other crimes did not increase more than a few percent. The authors also find that incarcerating drug offenders was almost as effective in reducing violent and property crime as was incarcerating other types of offenders. Furthermore, as a consequence of increases in punishments for drug-related crimes, cocaine prices are 10-15 percent higher today than they were in 1985. This jump in price implies that cocaine consumption fell, perhaps as much as 20 percent. The reduction in cocaine use begins to address the long-standing question of whether the enormous costs related to tougher punishment for drug offenses yield similarly large benefits to society. Previous studies suggest that the costs of current levels of incarceration across all crime categories far exceed societal benefits. However, in the case of drug offenders, the authors find that the cost-benefit calculations might be more favorable, because incarceration not only lowers crime, but also drug consumption. Annual expenditures of approximately $10 billion on drug incarceration almost pay for themselves through reductions in health care costs and lost productivity attributable to illegal drug use, even ignoring any crime reductions associated with such incarceration. The authors stress that their figures are speculative and may not include other relevant costs and benefits. They also do not explore other, potentially more effective ways of reducing drug usage rather than incarceration. (Les Picker) Martin L. Brown Chief, Health Services and Economics Branch Applied Research Program Division of Cancer Control and Population Sciences National Cancer Institute 6130 Executive Blvd, Rm. EPN-4005 Bethesda, MD 20892-7344 Phone: 301-496-5716 Fax: 301-435-3710 Email: [EMAIL PROTECTED]
