Cocaine Prices Have Fallen Steeply Since 1980s Recent government estimates show cocaine's price fell to about $135 per gram --down from the peak prices of the early 1980s, when a pure gram of the drug sold for several hundred dollars. An analyst attributes the low prices to a drop in popularity, along with aging drug traffickers.
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Cocaine Prices Have Fallen Steeply Since 1980s

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Cocaine Prices Have Fallen Steeply Since 1980s

Cocaine Prices Have Fallen Steeply Since 1980s

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For several months now, the street price of cocaine has been falling in the U.S. According to some official estimates, the retail price of cocaine fell to about $135 per gram, that's down significantly from the peak prices in the early '80s when a gram of pure cocaine costs as much as $600.

To find out why the price of cocaine is falling, we're joined now by Peter Reuter. He's a professor of public policy and criminology at the University of Maryland, College Park.

Professor, thank you for joining us.

Professor PETER REUTER (Public Policy and Criminology, University of Maryland): You're welcome.

NORRIS: So why is the price falling?

Prof. REUTER: It's a combination of factors. One thing is simply the people who are selling the drug are getting older, and that's important because it means they're less violent. They're very much the same people that we're selling the drug back in the 1980s when they were, you know, 20 years old and shooting off everywhere. And it was a business in which you had to take lots of risks of getting killed or injured, and that probably made the drug a lot more expensive.

It acquired a market, they can do less in legitimate workplace so they're asking less for their labor in selling the drugs. And so the price of cocaine had just gone down almost relentlessly for a 25-year period.

NORRIS: Almost relentlessly, is the slide been steeper in recent years or has it been sort of a slow dip?

Prof. REUTER: It's been - the big declines were in the 1980s and probably part of that was simply what in the business world is called learning by doing. Drug dealers and drug organizations got better at their business, so the cost went down.

Since about 1990, there's been a gradual decline, it's not the same every year, but the result has been probably that the price is now half of what it was in 1990.

NORRIS: Powder cocaine and crack cocaine?

Prof. REUTER: Yes. The price has dropped more or less in parallel for both powder cocaine and crack.

NORRIS: It sounds like, you know, when you're talking about the cocaine trade, it sounds like you're talking about any other kind of industry. Do standard market forces apply? Are there other factors at work here, such as supply and demand?

Prof. REUTER: Well, supply and demand suddenly matter, but not the supply of the drug. The world can produce ample amounts of cheap white powder that Americans want to put up their nose or in their arm. That's never an important part of the cost. The cost is labor. The cost of getting people to take the risk of being a distributor of an illegal substance, and facing a pretty serious risk of going to prison.

NORRIS: Are there other factors at work here, the purity of the product? Or whether cocaine users - up or down? Popularity in the U.S.?

Prof. REUTER: The popularity is really the critical thing. I mean, the price of cocaine has fallen over this long period of time, but we've not seen a new epidemic of cocaine use. The same thing has happened with heroine. These are unfashionable drugs now, not to everybody, everywhere, but overall, there's very little taste, amongst people who aren't currently cocaine users for that drug. And that's the most fundamental change of the last 20 years.

NORRIS: Does this have anything to do with the increased popularity of other drugs, ecstasy or methamphetamine?

Prof. REUTER: The methamphetamine epidemic is only in some parts of the country. And you see this drop in cocaine prices throughout most of the country. So in Washington, for example, the prices have dropped a lot even if the methamphetamine hasn't arrived here. I'm sure the popularity of methamphetamine has had some effect, but not a big effect.

And ecstasy, ecstasy has come and gone, so to speak. Ecstasy was a popular youth drug, and it is almost disappeared.

NORRIS: So is the price of cocaine a measure of whether the war on drugs is succeeding or failing? What do we see in these falling numbers?

Prof. REUTER: Well, as an economist, I, of course, have to believe that price matters. I do think that it's one of the things that you would expect to see go up if the war on drugs was being successful. If you go chasing drug dealers and walking them up, then you would hope to see drugs becoming more expensive and less available. They're not more expensive, they're not less available. So to that extent, I just don't think that there's a case that the war on drugs has been successful. There are other things that you have to measure as well, like the popularity of the drugs. But the continued decline of price is a real problem for the drug warriors.

NORRIS: Professor Reuter, thanks so much for talking to us.

Prof. REUTER: You're welcome.

NORRIS: That was Peter Reuter. He's a professor of public policy and criminology at the University of Maryland, College Park.

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