Is crack cheaper than (powder) cocaine?

Headnote

Abstract

Aims. To compare the prices of cocaine powder and crack cocaine in the United States. Design. Retail prices for crack and powder cocaine are compared for 14 US cities between 1986 and 1991 using regression analysis and t-tests. Measurements. Prices are estimated from the United States Drug Enforcement Administration's System to Retrieve Information from Drug Evidence (STRIDE) database. Findings. On average, crack is neither more nor less expensive per pure unit than powder cocaine. Prices are not equal in every city in every year, but crack is equally likely to be more or less expensive, and the differences are not large relative to variation in prices of both forms of cocaine between cities and over time.

Conclusions. Crack has been widely believed to be cheaper than powder cocaine, and this "fact" has been used to help explain why US drug problems worsened in the 1980s. However, crack is not, in fact, cheaper per pure unit than powder cocaine. Other explanations must be sought for why crack spread so rapidly relative to powder cocaine.

Introduction

The crack cocaine epidemic has caused greater public concern and arguably greater problems in the United States than any other episode of illicit drug use in recent history. Various explanations have been offered, ranging from idiosyncrasies associated with crack's retail distribution to claims that "unique among drugs, it is instantly compelling" (Gold, 1987). Another common explanation is that crack is cheap and, in particular, that crack is cheaper than (powder) cocaine. The following quote from a US Department of Justice publication is typical: "drug traffickers and street dealers saw an opportunity to boost their profits by marketing new products to existing and new customers. `Crack,' a cheaper, smokable form of cocaine, flooded the market in many cities" [emphasis added] (Chaiken, 1993). The belief that crack is cheaper than powder cocaine is widespread. Even Nobel prize-winning economist Milton Friedman (1989), in his famous open letter to former drug czar William Bennett, referred to this "fact".

Some experts remain skeptical (e.g. Kleiman, 1992), however, noting that crack is simply cocaine base. Since crack can be made easily from powder with inexpensive, everyday materials, it does not seem reasonable that crack could be much more expensive than powder cocaine. Similarly, if powder...