Research Project

The Drug Problem in the UK - Is there a solution?

The aim of this project is to guide you through using the Biz/ed site to help you in your studies whilst at the same time researching a topic that will enable you to apply a variety of concepts you either have, or will, come across in Economics.

All exam boards have questions that expect you to draw on stimulus material or evidence of various kinds. The evidence in this case is related to the issues associated with the illegal drugs trade in the UK.

Research suggests a great many bank notes in the UK are contaminated with class A drugs. Does this help to highlight how deep the problems are and what can be done to solve these problems?

The Scenario:
The use and abuse of illegal drugs in the UK is a widespread and growing problem. The effects of such use manifest themselves in undesirable impacts on individuals, families, communities and the country as a whole. The cost of dealing with the problems associated with drug abuse are felt by everyone and paid for by everyone. At its most basic, the market for drugs represents a highly lucrative and expanding business. Measures to control or eliminate drug use have had variable degrees of effect in the UK and elsewhere.

The research you will undertake will do should follow these steps - this is not unusual for any research project and so can be thought of as a blueprint!

• Identify the problem
• Quantify the problem
• Identify possible solutions
• Quantify the possible solutions
• In the light of the quantifiable evidence, arrive at informed conclusions
• Consider other non-quantifiable factors
• Formulate final conclusion.

Note the emphasis on quantifying the information - what we are attempting to do is to highlight the costs and benefits of different approaches. By quantifying them we are in a position to be able to make more informed decisions. The basis behind all economics is resource allocation; in making decisions about the use of resources in different ways we have to make sacrifices; to understand the impact of the sacrifice we are making we need to have some notion of the extent of the sacrifices we are making to achieve a desired end. This concept is called opportunity cost.

For example:

A doctor has to make a decision about the treatment of two patients - she only has the funds to treat one patient. Both patients have serious illnesses. The chance of Patient A surviving the surgery and making a full recovery is estimated at 75% whereas the chances of survival of Patient B is rated at only 5%. The cost of the treatment is estimated at £50,000.

The decision is clearly a very difficult one, but in purely economic terms the resource use in treating Patient A is preferable to putting those same resources to use in treating Patient B. If patient B was treated in preference to Patient A, the cost in terms of the benefits foregone would be greater and therefore would not make for a logical allocation of a scarce resource!

Our problem therefore is that there is an issue about the cost of the use of illegal drugs in the UK. There might be a number of solutions each having its own set of costs and benefits - not only to those who use and abuse drugs- but to society as a whole. The question is which solution would provide the most benefits but the least cost?

The Problem

At this stage of the project it is best to start with some intuitive thinking - to put it another way, use your common sense about the issue. You can do this by jotting down some ideas either in note form or via a spider diagram or mind map. This will be the groundwork that will help to direct you to appropriate sources of research and away from inappropriate sources - very important given the vast amount of information that is available!

The above is not to suggest that this is the full extent of the problems but you now have something on which to focus your research. The next thing to think about is what some of the solutions might be? This is designed as a piece of work rooted in economics; therefore you must ensure that you use relevant economic concepts when seeking your solutions.

Solutions:

• Market solutions - restrict supply, reduce demand
• De-regulate the market - i.e. legalising drugs
• Behavioural remedies - punishment

The possible solutions look a bit 'thin' - in reality there may be a whole host of things that can be done to reduce demand and restrict supply and equally the consequences of de-regulating the market could take a book in itself! But the important thing is that we have got some leads to follow, so even at this early stage in the project we have made some progress!

Now we need to start doing some serious research and find out some facts. But where do we start?

There are a variety of possible sources of information; simply put these are:

• Newspapers
• Official Statistics
• Dedicated organisations such as charities
• Magazines
• Books and journals
• Primary sources - interviews, questionnaires etc
• Internet search engine - such as Google

Some of these sources will be useful - others probably not, so it is a good idea to make a decision about what you think will be useful at this stage. Primary research in this instance isn't going to be very valuable - unless you happen to be acquainted with the Government's appointed 'drugs Tsar' or you know someone who has specific information on drugs such as a social worker or member of the police force.

Follow the steps below to find some initial information - remember not all of it will be directly useful and as such we will have to 'filter' out the information at a later stage - skim reading is a key skill at this stage. Try reading the opening line of each paragraph - think whether it sounds as if it contains anything like relevant information - if it doesn't then skip it!

1. On the Biz/ed Web site click on the Learning Materials section and then on the MBA Materials link. Within this section there is a link entitled 'Chapter 1 Accounting and Finance' Now look at Accounting and Finance Related News and Information. http://www.bized.co.uk/fme/1-3.htm You will now have the opportunity of linking to the main broadsheet newspapers and other news agencies. This is certainly not the first place that you would think of looking - but our expertise here at Biz/ed is here to help you! Now that you know where this link is you can use it again in the future! - click on this link.
2. Select one of the newspapers and begin to search for useful information using their search facility. Be careful how you input the information - the quality of your search request will determine what you get back. Try using different combinations of words and see what comes up - e.g. just 'drugs', 'illegal drugs', 'drugs strategy', 'drugs problem' and so on. With newspapers it is also useful to ensure that you are searching their archive database - the tendency is to search only for information for that day otherwise! Go back about 1 year at most!
3. When you find useful sources - perhaps only headlines and first paragraphs (especially if you have to pay for the whole article) cut and paste them to a separate folder you have created called 'evidence' or something equally creative! By having that information all in one area you will be able to go back and sift through it to decide what information is useful to your project.
4. Try other useful sources - examples are listed below.

http://observer.guardian.co.uk/drugs/0,11908,686419,00.html A special report with a series of articles on illegal drug use.
http://www.homeoffice.gov.uk/ The Home Ofice Web site with a direct link to a section on 'tackling drugs'
http://www.ukonline.gov.uk/Home/Homepage/fs/en The on-line government information service
http://www.bized.co.uk/dataserv/ons/onshome.htm A link to the Office for National Statistics home page via Biz/ed
http://www.crimereduction.gov.uk/drugsalcohol60.htm - Updates on the government's drugs strategy
http://www.official-documents.co.uk/ A link to an archive on official government documents - again careful use of the search engine will reap rewards
http://www.observer.co.uk/drugs/story/0,11908,686664,00.html One of the articles from the series highlighted above
http://www.guardian.co.uk/drugs/Story/0,2763,723075,00.html Another useful article from the same series
http://www.publications.parliament.uk/pa/cm200102/cmselect/cmhaff/318/31802.htm Report by the Home Affairs Committee - 'Is the government's drugs policy working?' Very useful document!

When we went through these sources, we came up with a large amount of information. You must be very selective in what you use. Again, skim reading is vital to ensure that you do not get any material that is not of use or which will merely result in you wasting time. The collection of the data and sources is an important part of the project - your ability to seek relevant information, select what is appropriate and use the information collected wisely as a source of support for the points you make is all part of the assessment objectives of this task.

Remember to note where you got the information from - you should always acknowledge sources of information you are using to support your arguments ( quote the publication, author, date and publisher of a book or the author and the web address as well as the date you accessed the information if it is information from the Internet); if you cannot remember where you got them from it can be a real pain and very time consuming to re-locate them! Such an approach is also an important step to becoming more independent in your learning and taking a greater degree of responsibility for your own learning rather than relying on someone else doing things for you!

When we worked through the research, it took about two hours (two to three lessons?). Because we have given you pointers about appropriate sources it should not take you this long. This sounds a great deal of time but it does serve to save time later in the process and remember, this is meant to be a research project and is the sort of skill a student is expected to have! Hopefully that time will have been well spent in terms of the quality of the final report and subsequently, the marks you will get!

The information we collected can be broken down into different types - newspaper headlines, official government reports, specialist body reports and statistics. We have now got to do something with all this information whilst remembering that this is an economics research project so we will have to think about what concepts are going to be relevant.

When reading through the articles (yes I am afraid that this is a requirement!) highlight information that will be useful to you. What information you think is useful will be a subjective thing but remember you will only be able to use a fraction of what you have collected! When we trialled this activity we had 37 pages of what we thought was useful sources of information; when we cut and pasted what was going to be the most useful, we ended up with 9 pages - these 9 pages formed the basis for the report in that they provided us with the statistics and comments that we could use to support the points we wanted to make.

Having done our background reading and research we now have a reasonable level of understanding of the problems and issues that surround the illegal drugs market. We are not experts by any means but we have a good deal of information to base our argument on.

Some Economics!!

Our next task is to try to identify, out of all the things we have read, what economic concepts are relevant in our project. It may be that you are not familiar with all of the concepts that may be relevant in this investigation but your teacher/lecturer may well be keen to introduce you to some new ideas to help you to understand the integrated nature of economics and the interdependence of so many key concepts. Below is a map of the key concepts that we might need to use.

Apart from these key areas, there are a host of other possible economic concepts that could be relevant in our analysis:

• Advertising
• Marketing
• Profit Margins/Mark Ups
• Opportunity Cost
• Tax Revenue
• Value Added
• Poverty
• Development - LDCs
• Positive and Normative statements
• New Product Development
• Substitutes and Complements
• Behavioural Theories

If you are unsure of the meaning of any of the things above, use the Biz/ed glossary and diagram bank, theory explanations or 'notes' in the Learning Materials section to help you.

Some Analysis

The next step is to think of how some of these concepts relate to what we have found in our research. Follow the questions below as a guide to helping you make some economics sense of the issues:

1. The market for drugs - like any other market - is made up of the demand for drugs and the supply of them. The price will be determined by the interaction of the two. Sketch some demand and supply diagrams showing why prices of different drugs might differ. (Hint - if supply is limited prices might be higher but if it is easy to obtain the drug in question then prices may be lower or the extent of the demand for the drug might influence its price).
2. Think of the factors that determine both demand and supply (i.e. those factors that cause a shift in the demand or supply curves!) Try to jot down some notes as to what specific factors might influence the demand and supply of drugs. For example, think about the substitutes and complements for drugs, the factors influencing the cost of drugs, the effects of advertising (both positive and negative) and so on.
3. Think about the influence of price, income and cross elasticity on the demand for drugs.
4. Think about the influence of elasticity on the supply of drugs.
5. Think about why the mark-up on the cost of producing drugs is so high - use the concept of normal and abnormal profit here.
6. Think about the nature of the externalities associated with drug use.
7. Use demand and supply analysis to explain why the price of drugs has fallen over the past 12 years.
8. We found a very interesting quote from Terry Byrne, Director of Law Enforcement, HM Customs and Excise in the House of Commons Commission Report (9 May 2002). (See http://www.publications.parliament.uk/pa/cm200102/cmselect/cmhaff/318/31802.htm and look at the section entitled 'Availability of illegal drugs in society' Section 18). Try to use supply and demand analysis to explain the point he is making.
9. You should be able to find plenty of evidence on the impact of drug misuse on the NHS. Think of the relevance of opportunity cost here; for example, if x is spent on the police to control levels of supply, could that money be more usefully spent elsewhere - e.g. on treatment facilities or education - if so which would work better?
10. Think about the relevance of the negative and positive externalities associated with drug misuse. How easy is it to quantify such information?
11. Are there other policies that we can look at to give us some help in evaluating the likely success or otherwise of different solutions? Again the Home Affairs Committee report highlighted above is very helpful in this respect!
12. We may need to ask serious questions about the assumptions made in the information and evidence we have: How reliable are the claims made? (think about positive and normative statements!)

Near the End!

If you have worked through the analysis in the steps suggested above you are in a pretty good position to now start to use the information at your disposal to look at the potential solutions and to evaluate those solutions. Let us look at the possibilities:

• Reduce use through a demand side approach - finding ways of influencing demand to reduce the prevalence of drug use - for example education - but does it work?
• Reduce use through restricting supply - enforcing prohibition, cracking down hard on dealers, increasing punishments and so on - but are people influenced by such things?
• Using a combination of the two policies above (think here of the relative costs!)
• Adopting a policy of liberalisation of the drugs market - there could be a number of possibilities here: (if this were to be a solution, how many extra people might start to use drugs - elasticity??)
  • Decriminalising some or all drugs
  • Re-classifying drugs
  • Turning a blind eye but providing some form of support network to help those caught up in it!
  • Outright legalisation of some or all drugs
  • Greater government/international regulation of a liberalised drugs market

This is where the higher order skills that earn you the most marks really come into play. You have to make a judgement - hopefully supported by selective use of the 'facts' or information you have collected. For example, if you wish to suggest that the only way forward is to limit supply, refer to appropriate evidence - a quote or some facts and figures from your research to support it. The possibilities for what you come up with are endless, however, what you must bear in mind is that those assessing your work are looking, not for the amount of content you have, but more for the skills you have demonstrated in using knowledge creatively, applying it to different contexts, how you selected and used the information and your ability to make informed judgements. By informed judgements we mean that there should be some evidence to back up your view. It is not therefore acceptable to suggest that the way of solving the drugs problem is to shoot anyone who decides to take drugs!! (Unless there was compelling evidence that such a policy had been tried and had achieved some success) - however, the evidence you have collected should enable you to be able to provide some form of informed judgement!)

So when writing up the report, remember the following:

• Avoid repeating the information you have collected - use it to support rather than merely 'filling out' your report
• Use economic concepts to explain the points you are making as much as possible - this is an economics report after all!
• Structure the report carefully: remember the points given at the very beginning!
• Ensure that any quotes or data, etc, that you use are fully acknowledged
• The introduction should be short and just sets the scene - possibly outlining the argument you are going to make.
• Outline the problem/s
• Consider the possible solutions - think of how you can incorporate relevant economic concepts.
• Evaluate the solutions
• Draw conclusions

What Have You Learned?

• How to research and access information from a wide variety of sources
• How to use the power of the Biz/ed site more effectively
• How to use knowledge
• How to select and interpret information and data
• How to analyse effectively
• How to evaluate material
• How to write a coherent report