HomeNewsAnalysisHow Much Of Mexico's Violence Is Fueled By Its Domestic Drug Market?
ANALYSIS

How Much Of Mexico's Violence Is Fueled By Its Domestic Drug Market?

MEXICO / 5 NOV 2012 BY ALEJANDRO HOPE* EN

Mexican crime analyst Alejandro Hope takes a look at Mexico's recently released National Addiction Survey, what it says about the domestic market for drugs and the corresponding level of violence in the country.   

On October 28, Mexico's official statistics agency released the country's National Addiction Survey (ENA), a comprehensive survey on drug use in the country. Among its findings was that the number of illicit drug users, which shot up from .2 percent in 2002 to 1.4 percent in 2008, has been relatively stable since the latest poll, with 1.5 percent of respondents reporting the use of an illicit substance. Below, Alejandro Hope examines what this might mean for Mexico's domestic drug market.

These are my initial thoughts; more will come as I continue processing this information. There is, however, a topic that deserves special attention. In recent days, several analysts have endorsed the theory that, given the low prevalence of consumption shown in the survey, the domestic drug market is too small to explain the rise of violence in the past couple of years. I'm not opposed to the argument, but it requires some nuance:

The prevalence of drug use is low in relative terms, but that does not mean that the market is insignificant (after all, we are a country of 114 million people). In Mexico, according to my very imprecise calculations, about 15 tons of cocaine are consumed a year, which probably puts us among the ten or fifteen largest markets in the world in terms of volume. By some rough estimates I have made (I can’t do a more precise analysis because there is no good pricing data), the value of the drug market in Mexico is around a billion dollars; not huge, but noting to laugh at either. More than one person would be willing to die and kill in order to control a piece of that market.

There is no direct relationship between the size of an illegal market and the amount of violence that it generates. What matters is its specific characteristics. In particular, these include the visibility of the market and the number of transactions involved. The more visibility, the greater likelihood of confrontation over control of the market, and the more transactions, the more likely it is that some will go wrong (just by the law of large numbers). Large-scale trafficking is discreet and involves operations of hundreds of kilos or even tons, the retail market is chaotic and involves millions of transactions of one gram or less. Predictably, the second is much more violent than the first per the weight of each transaction. Because of this, size comparison does not tell us much about the level of violence associated with each.

In calculating the connection between drugs and violence, prevalence of use matters less than changes in the absolute number of users. An additional user of cocaine, for example, may cause an increase of a hundred or more retail transactions in a year. As such, if there was an increase of 100,000 users of cocaine between 2008 and 2011, there were probably 10 million additional transactions. That might be enough to explain a significant part of the spike in violence in recent years.

From the addictions survey we can infer the number of drug users, but not the size of the market, much less its evolution over time. To do this, we would need to know the average amount consumed by users and the various street prices of different drugs across time. The survey gives us some information about usage patterns, but almost nothing about prices. The pricing data of the ENA is notoriously bad; they are self-reported values, with very few observations (few users provide information on prices) and no adjustment for purity (it is not known if users are talking about 10, 50 or 90 percent pure cocaine when they mention a price). And in Mexico there is no alternative dataset (the information that I have used in the past is strictly anecdotal). So we do not know what has happened to the market in recent years. Consequently, it is entirely possible (I say possible, not certain) that it has surged due to high prices, even if the prevalence of drug use did not increase.

With that, I'm not endorsing the theory that the domestic market is the main source of our violence. But it is clear that, by itself, the National Addiction Survey does not contradict it. In the link between between drugs and violence, size isn’t the only thing that matters.

*Translated and reprinted with permission from Alejandro Hope, of Plata o Plomo, a blog on the politics and economics of drugs and crime published by Animal Politico. Read the Spanish original here.

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